Building houses without equity is becoming increasingly popular. In such a case, one speaks of the term “full financing”. The advantage of such a financing option is not insignificant. Even though a house is being built, the liquidity is fully preserved for the client.
What are the disadvantages?
Of course you have to be prepared that this 100% financing does not come without disadvantages. After all, the banks also want to hedge themselves. Most of the time, therefore, the biggest minus point is the cost. Credit institutions often charge higher interest rates than comparable loans with existing equity. This factor therefore has a direct impact on the monthly installment.
Another disadvantage is certainly that you always have a certain residual risk as a developer without equity. Should damage unexpectedly arise or other costs be borne by the building owner, a pressing situation could quickly arise. In addition, in the event of unemployment or disability, the entire property is at risk of loss, as payment of the installments could then be difficult.
Find a reputable real estate finance provider and play it safe
No matter how you decide whether you want to finance with or without equity. It is important in any case that you inform yourself in advance and take a close look at different offers and accordingly compare them with each other. You should also look at the lenders. Are you dealing with reputable banks or is it a provider that is fairly unknown? You should also take a close look at the different types of loan and make a well-considered decision.
Annuity loans or fixed-rate loans with repayment benefits are particularly popular. With both variants you can build your own home with very small loans and thus realize your dream of a house. In the best case, one uses a comparison calculator on the Internet or a personal consultation for direct comparison. Of course, our team will be happy to answer any questions you may have about building a house without equity.