Different concepts and approaches have been established in connection with real estate financing.
Taking out a building loan and using it to move into your own house is only one way.
Households also repeatedly resort to advance bank loans .
What is behind it?
In some cases, taking the advance bank loan can pay off.
At this point, builders must also be clear that the bottom line is that the construction loan can become more expensive.
Advance bank loan: what’s behind it?
The term bank advance loan is closely related to the building society contract. Although this provides equity capital and a low-interest loan, borrowers must save a certain minimum balance, which usually takes several years.
At this point, the advance bank loan takes the position of advance financing – it bridges the period until the home loan contract is paid out.
The special feature is that the loan amount for the advance loan is identical to the sum from the building loan contract. Ultimately, the building society customer replaces the sum raised through the advance loan with the payment of the building society contract.
Term and repayment of the advance loan
Advance financing has the advantage that it immediately provides the client with liquidity – without having to put up with waiting times. With regard to the repayment, this is generally a final loan. The loan amount is only transferred to the bank as a one-off amount at the end of the term.
In contrast, only the interest – usually in monthly tranches – is paid to the bank during the term. This keeps the construction loan clear in the monthly charges.
- The combination of an advance bank loan and a home savings contract generally means that payments have to be made in a home savings contract within the term, which means that the savings must also be saved. This aspect has to be considered in any case.
The term for the advance loan usually extends to periods between five to 15 years. Then the repayment is made with the home savings sum. This is followed by the repayment of the home loan. The bottom line is that construction finance quickly extends from 25 years to 30 years. A financial responsibility that every household needs to be aware of.
Conclusion: The bank advance loan paves the way into your own home today – although the building society loan contract can only be allocated the day after tomorrow. In any case, builders have to deal with the challenges of pre-financing in detail.