Finance condominium with annuity loan
The dream of having your own four walls does not stand in the way of well-considered financing. For many, having their own four walls is the ideal idea for their lives. A condominium is not only a concern for those who live in rent that they would like to meet. As a retirement provision, the condominium can make a large contribution to enjoying retirement. If there are no more children in the house, an apartment offers enough space to develop freely. But a condominium is not only worth considering as a retirement provision, it is also a good investment opportunity to skim off returns. Condominiums as an investment, generally real estate, are known to be among the safest investments, even in times of crisis.
Condominium as an investment
However, it is not so easy to use a condominium for capital investment. At first glance, one overlooks an important aspect: Although you first see the rental income that flows from the system into your wallet, the expenses for the apartment are often underestimated. Generally speaking, one could say that a condominium is still cheaper than buying a house, but even with a condominium you can expect financing costs of 100,000 dollars or more. Of course, the price depends largely on the size and location of the apartment, but you also have to consider what is more profitable in terms of size and location.
For the financing of the condominium, many will have to take out a loan that they will have to take out. You will only make a real return when this loan is paid off, because the installments you pay for the loan, plus interest, will initially exceed the rental income. This could be a small losing streak on the way to financing the condominium. However, once this has been overcome, nothing stands in the way of the profit from the rental income. Of course, you also have to consider that new obligations come up if you suddenly become a landlord – so here you should also inform them exactly!
What is the best way to finance the condominium?
For the pre-financing of the condominium, it is also necessary to compare if you want to find the cheapest possible financing. In general, however, there are financings that are better and those that are less suitable for financing the condominium. Annuity loans or fixed-rate loans offer good financing options here.
Financing with an annuity loan
An annuity loan has the advantage over a repayment loan that the installments that have to be repaid remain the same over the entire term of the financing, provided that a corresponding fixed interest period has been set. The installments to be paid are made up as follows: One part of the installment is a repayment part with which the credit debt is reduced and a second part which corresponds to an interest. The interest rate to be paid is agreed upon conclusion. With annuity loans, it is advised to pay 1 percent of the amount to be repaid in the first year.
Financing with a fixed loan
A fixed loan is also called a maturity loan or a maturity loan. As the names suggest, the loan amount to be repaid is only repaid at the end of the term. The term can also be variable, and the fixed loan can also be canceled. During the term of the fixed loan, you only pay interest on the loan. At the end of the term, the loan is usually repaid with a building society contract or life insurance.
To finance the condominium, it is common to choose an annuity loan or a fixed loan, but here, too, a comparison is necessary so as not to fall into a debt trap – in particular the effective interest rate of the individual offers should be taken into account, then the financing of the condominium actually stands nothing more in the way.