Understanding Loan Mathematics: Determining the Ideal Borrowing Amount

Mortgage calculators are essential tools when seeking a loan for a property in Germany. But what exactly goes into securing a loan here? Let's break it down.

Firstly, to take out a loan in Germany, you must be of legal age, have your residence and an account in Germany, have sufficient creditworthiness, and have a positive SCHUFA score. These are the basic requirements that banks look for when considering your application.

When it comes to loans for specific purposes, such as a heat pump, costs can vary significantly. Loan costs for such a project can range from 3,000 € to over 4,700 €. However, if you're considering a loan with two people, you might be able to secure a higher loan amount and a more favourable interest rate.

The rule of thumb suggests that the loan amount should not exceed 10-15 times your monthly net income. For instance, with a monthly net income of 3,000 €, the maximum loan amount could be between 30,000-45,000 €.

The current credit calculator offers loans from over 20 banks, including Deutsche Bank, Commerzbank, ING, Targobank, Barclays, Santander, and many more, totaling over 70 credit products through partners like Smava and others.

It's also important to specify the correct purpose of the loan, as this can help reduce costs. For example, an auto loan may have different conditions compared to a mortgage.

A mortgage usually starts at a loan amount of 50,000 € and can include several hundred thousand euros. Banks often grant a mortgage at better interest rates due to the property serving as security.

When you take out a mortgage, a land charge is entered, regardless of whether you buy a house or an apartment. This is a legal claim on the property that secures the loan.

The repayment of a mortgage can take several decades, but paying installments monthly and in advance can help reduce loan costs. In fact, 23% of respondents in a recent study used an installment loan.

However, it's worth noting that a residual debt insurance may not always be worthwhile, especially for small loans or short terms. Similarly, some providers may charge a compensation for additional repayments, which can help pay off the loan faster.

Lastly, it's crucial to remember that you will not receive a loan without SCHUFA and without proof of income from German banks. So, keep these factors in mind when applying for a loan in Germany.