Different loan options for retirement

If you want to make a good living for your retirement today, you can do it in different ways. One possibility is the pensions promoted through direct grants or tax benefits. However, home ownership is also a solid way of preserving one’s standard of living by saving costs in old age. That’s why you should…

Consider mortgage lending as a pension

If you want to make a good living for your retirement today, you can do it in different ways. One possibility is the pensions promoted through direct grants or tax benefits. However, home ownership is also a solid way of preserving one’s standard of living by saving costs in old age. Therefore, one should also consider a mortgage lending as a good chance of retirement. The current financial market offers several options:

  • Building loans
  • mortgage loan
  • consumer credit
  • Personal loans
  • policy loans

As a rule, a builder will prefer mixed financing for his construction project. Equity must always be available for mortgage lending. The banks are calling for a minimum, which is currently at least ten percent. Some providers will only give a construction loan if there is 20 percent equity.

What an ideal mixed financing could look like

Of course, the optimal blending financing brings more than 20 percent equity, because it allows us to obtain particularly favorable interest rates. Since the interest on mortgages is currently even less than three percent, it does not always make sense to contribute the home savings loan. Here it must be examined in each case whether it makes no more sense to save the Construction loan contract completely. Then, the term of the loan agreements or at least the interest rate of the loans should be adjusted to the remaining term of the Construction loan contract, so that a free replacement in height of the Construction loan sum is possible.

If theoretically money is available for a partial replacement, then one should also look at whether one might not get higher interest rates if one parks it in a good and above all secure facility. For example, fixed interest rates are currently higher than the cheapest interest rates. However, it must not be forgotten in these calculations that one has to pay the interest on investments plus withholding tax plus church tax and solidarity surcharge. It is therefore important to deduct these shares before comparing profitability, after considering whether a personal tax rate would be more favorable.

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