Not many banks actually offer full financing or financing without equity – it is correspondingly difficult to make general statements about which interest rates and conditions for full financing actually apply. In addition, it is difficult to name standard conditions for loans in general and therefore also for full financing, since individual factors are used for the calculation.
Factors used for the calculation
In most cases, two factors are decisive: firstly, the creditworthiness of the customer who requests the bank for full financing. Because banks are companies that have to include existing risks in their considerations or calculations in order to minimize the risk of never seeing a large part of the borrowed money again.
The second major factor that affects the interest and terms of financing without equity is usually the location of the property. The location of the property is relevant because full financing is often granted by regionally operating credit institutions and savings banks that use individual calculation bases.
The following case is assumed for clarification or as an example calculation:
The purchase of a newly built single-family house is to be financed, the market value of the property or the purchase price is 143,000 USD, plus 7,000 USD so-called acquisition costs.
Borrower’s wealth or income situation
The borrower’s wealth or income situation is impeccable, for example there are no serious negative entries in the Credit Bureau, and the borrower has had a permanent and permanent job for at least one year without having changed employers.
A first-rate land charge is entered in the land register as security, the combination of full financing with a Lite Lender loan is feasible. Under these conditions, financing without equity or financing with 120% – i.e. a loan amount of $ 150,000 – could result in the following interest and conditions, for example:
With a borrowing rate fixation of 5 years, a borrowing rate of 3.80% or an effective rate of 3.87%. The monthly rate would be 600 USD, the remaining debt after the end of the interest rate fixation, which of course can vary depending on the agreed repayment start, would be 141,754 USD.
Borrowing rate fixed 10 years – borrowing rate 4.45% – effective rate 4.54% – monthly repayment 681.25 USD, residual debt after borrowing rates 131.150 USD. Borrowing rate fixed 15 years – borrowing rate 4.96% – effective rate 5.07% – rate 745 USD – remaining debt 116,700 USD.
Borrowing rate fixed 20 years – borrowing rate 5.30% – effective rate 5.43% – rate 787.50 USD – residual debt 96,802 USD. Borrowing rate fixed 25 years – borrowing rate 5.52% – effective rate 5.66% – rate 815 USD – residual debt 69,501 USD. Borrowing rate fixed 30 years – borrowing rate 5.61%, effective rate 5.76%, rate 826.25 USD – remaining debt 32.743 USD.
It is a simple and accordingly idealized calculation.