Real Estate Financing: In the country out of debt faster

With an average income, one needs 26 years in Germany, to pay off the loan for an apartment of 110 square meters. But regionally there are big differences.

He does not dream of buying a property and to be free of debt but in no time? this is the fastest possible in this country apparently in Altmarkkreis Salzwedel, in Saxony-Anhalt. At least this results in a study of Postbank. Thus, there are needed to pay off a loan for a condo with 110 square meters and this then to be able to call his own utterly average of only 6.1 years.

Salzwedel is located about 100 kilometers in a straight line from Hanover to the northeast. But Prignitz in Brandenburg or Holzminden in Lower Saxony this region is not far behind with an average payback period of 6.9 or 7.7 years. For 54 years average earners would, therefore, have to repay as its mortgage lending in W├╝rzburg.

Passenger housing market: Rents are rising and rising

For the analysis of Postbank, property prices were set in all districts and cities in Germany in relation to the respective average income. This was calculated how long someone needs to pay off a loan for an apartment.

It was assumed that at most 40 percent of net household income for principal and interest can be spent. During the term, the share of interest payments decreased, the percentage of repayment increases. The low-interest rate may result in financial mathematics to the fact that credit agreements have, at least theoretically very long run until they are finally extinguished. The chosen to finance equity ratio was 20 percent. It also covers the extra costs of the real estate purchase, adopted by 10 percent.

Basically, the study shows that homebuyers need longer on average in major German cities to be debt free again. In rural regions, especially many sparsely populated areas in eastern Germany, however, they can pay off their mortgage loans relatively quickly. This is different, of course there in regions that are attractive, for example, for tourism, and where also the average income is relatively low, such as the Baltic Sea.

On average, almost 26 years

Another finding of the study: real estate buyers need in this country at an interest rate of 2.5 percent on average almost 26 years to pay off the loan for her apartment of 110 square meters. If interest rates rise it to only one percentage point, the repayment period is extended, on average across all circles around seven years. In some cities, this effect suggests indeed down even more clearly for example in Lubeck with 27 years.

One reason to take advantage of the currently very favorable interest rate environment, the financial experts Postbank say. They recommend, therefore, the acquisition of an Immobile in the face may soon be rising building loan interest not to push on the back burner. About ropes buffs should not and probably superior to him buying yet. For many real estate prices have meanwhile risen significantly.

Currently, 2.24 percent to be paid in interest on the data of the FMH financial advice for a mortgage loan with 20 years fixed interest rate the national average. The sentence is somewhat recently fallen back. In deep it was in May even only about 1.85 percent. Ten years ago, interest on such funding still amounted to 5 percent.