Financing your own home on a low income – is that possible??

Not only passionate do-it-yourselfers wish to pursue their favorite hobby within their own four walls. For many people, this dream seems unattainable due to manageable income and low financial reserves. That said, there are realistic ways to finance a home in the current interest rate environment, as long as the aspirations for a house or condo remain realistic. We explain how a home can be financed even on a small income.

Dreaming is allowed – within certain limits

Most readers of our platform wish for stylish furnishings, a large garden or simply a better quality of life than they experience in the current rented apartment. Dreaming of owning a home is always allowed, as long as realistic options are not lost sight of in planning and financing.

For example, current rent payments are a good measure of how much money would be available for potential construction financing or repayment of a loan for property purchase. Even if there is a low income, this is paid proportionately for the rent of the current apartment. This amount of money could be used in the same way to Repaying the loan for a home of one’s own use.

Important for costing: The term of loan agreements for real estate extends on average over ten to 20 years depending on the fixed interest rate. According to this, follow-up financing is usually provided for. Interested parties can thus calculate over 20 to 30 years and take into account how much money would flow into rental payments during this time.

Finding the right financial framework

Another measure of realistic conditions for loan repayment is the available equity, in addition to monthly income. Many households, which have a small income, do not exhibit recognizable, private fortune. This would have been a few decades ago the core argument that the financing of a property will not be possible.

The times have changed, many credit institutions now offer full financing. For this no own capital funds must be brought along, even if thereby the credit sum turns out naturally more highly. Without equity, the loan interest rate is also likely to be somewhat higher, which can nevertheless contribute to secure financing for a suitably large or small residential property.

Strong consultation with the financing with small income importantly

For all questions about financing a property, it is important to rely on reliable advice. All the more importantly this aspect becomes, if the financing is to be repaid by a small income. In addition to the house bank, which primarily wants to sell its own loan products, it is worthwhile to work with a small income with a neutral financial specialist in the real estate range all the more.

Independent service providers like Huttig& Rompf have specialized in the consultation of prospective customers at the home of one’s own. To the service offer of such offerers belongs on the one hand the objective consultation. Many private tenants are possibly dealing with the purchase of their own property for the first time in their lives. Hereby many questions arise, which an industry expert clarifies competently.

Own home can be financed even with a small budget. However, if you have a low income, you must renovate the new residential property yourself or extensively renovate.

On the other hand financing partners take over a fundamental, computational analysis of the credit market. With the Inquiries to various banks and credit institutions the potential buyer or builder remains anonymous for a long time, so obtaining loan offers is completely discreet. Such an assignment is non-binding, so that the failure of a hoped-for financing does not entail any disadvantage in creditworthiness or reputation with credit institutions. As a rule, the first request for conditions runs without retrieving Schufa data.

Think long-term when planning with a small income

The serious financial planning and consultation with a professional service provider is also shown by its long-term perspectives. While banks are primarily interested in the customer, the independent service provider wants to secure follow-up orders and recommendations by offering first-class advice and favorable conditions. Thus, all important questions about the term and fixed interest rate are discussed with the potential borrower. The conclusion of a follow-up financing is mandatory, which should lead to a strong forward loan in the current phase with historically low construction interest rates.

When income is low, working with a loan broker makes all the more sense:

The independent financial intermediary carefully examines whether the loan to be arranged can be managed by the borrower with a small income. Because a burst of the credit would also damage the reputation of the mediator with its business partners, the banks.

In case of doubt, the financing of a cheaper house is then rather recommended, where the owner can provide for upgrading with own contributions and renovation work. If you decide for a house in need of reorganization, however, you should absolutely go through the costs of the reorganization well. Because with increasing demand for homes of one’s own also the costs for craftsmen rose in the comparison to past years clearly.

Image credits: Adobe Stock/terovesalainen, Adobe Stock/eranicle (chronological resp. sorted according to the order of the images used in the buyer’s guide)

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