You should never sign a loan contract to finance a home without having first obtained and compared loan offers. After all, it is about high loan amounts and long maturities – an interest rate comparison can lead to full savings.
On average, aspiring builders and buyers save around 1,500 to 4,000 USD (depending on the amount of funding) by comparing interest rates. Finally, this makes several monthly installments, which is why a comparison is more than worthwhile.
An interest rate comparison can be carried out in different ways. Unfortunately, therefore, the same mistakes are always made, which in the end lead to an unfavorable decision. Today we present the three biggest mistakes when comparing mortgage lending.
Comparison of advertising conditions
It starts with the advertising conditions. Almost all banks and building societies advertise with concrete terms. However, these are mostly top conditions, which, strictly speaking, are only available to a relatively small number of prospective borrowers.
It would, therefore, be wrong to use interest rates from advertising for a comparison. For a secure interest rate comparison, concrete financing offers must be obtained.
Compare loan offers on the residual debt
At first glance, it seems smart to compare loan offers on the residual debt. The idea is the following: All loan offers are subject to the same term / fixed interest rate.
It will be checked how the remaining debt is at the end of this period. The assumption of many builders and buyers is that the financing offer with the lowest residual debt automatically represents the best choice.
But wrong thought, the loan scores with the highest interest rate. The residual debt at the end of the comparison period may be the lowest, but higher lending rates have been paid in return. If one extrapolates these additional costs, then the lower residual debt is quickly exposed as a fallacy.
Interest rate comparison for different financing constructs
The financing solutions of individual banks and building societies are partly designed differently and therefore can not always be compared directly with each other. However, those who still choose this route and, for example, only pay attention to interest rates, may compare apples to pears.
Tip: Professional support when comparing mortgages
You do not want to take any risks when looking for a cheap mortgage? Then let the independent expert support you. Our consultants examine your project objectively and help in the first step to optimally shape the financing taking into account your needs.
In the second step, we examine the market and evaluate the terms of more than 400 financing partners. This makes it clear at a glance where low-interest rates attract your mortgage lending.
The advantage for you is that our comparison is completely non-binding and free of charge. You pay no fees and can decide at any time, whether and where you take your real estate loan.
That way you stay flexible – at the same time, you benefit from comprehensive advice on mortgage lending, which is completely tailored to your real estate project (construction, purchase or follow-up financing).
Would you like to know more about our interest rate comparison or get specific conditions? Then submit your request now – we are happy to advise you.