The chic apartment in a good location or the family house in the countryside
real estate costs a lot of money. Buyers usually take out a loan. Sometimes they take over with it. To prevent this from happening so quickly, the European Parliament passed new rules on consumer protection in Strasbourg on Tuesday. They should apply from April 2015, when the EU member states have formally adopted the compromise.
What exactly has the EU decided?
Consumers should in future be fully informed about risks and costs before concluding a real estate loan. What is new here is that the bank must inform the customer exactly about the future interest and repayment obligations. Suppliers must also use a single European fact sheet to help shoppers compare loans better.
At the same time, customers should be able to repay loans ahead of schedule. In Germany, construction loans usually have a long interest rate. Who wants to pay the sum before the end of the agreed term, for which it is often expensive. These compensation payments are limited – but remain allowed.
What does this mean for consumers in Germany?
Above all, consumers can profit in this country from the duty to inform. “Today you are usually not informed about how rising interest rates affect your financing,” explains Max Herbst of the FMH financial consulting in Frankfurt. “Banks often act as if today’s interest rate will persist within the next 40 years.” But those who borrow in the current low-interest phase must adjust to higher interest rates in the future.
For example, a loan of 100,000 euros with a term of 10 years currently costs an average of 2.79 percent interest. The monthly rate in this case is around 396 euros with a repayment of 2 percent. If the customer has to pay 6 percent interest after expiry of the fixed interest rate, his monthly rate rises to around 604 euros.
What is the point of a real estate loan?
In Germany, real estate loans are usually given with a fixed term. The longer the term, the higher the interest rate. What sounds unfavorable, can still be worthwhile. Although you pay with a term of 15 years, about 0.5 percent more than 10 years, but at the same time there is a longer interest rate security and thus more time to take care of a follow-up financing. Customers should also agree to special repayment and redemption changes in writing.