Favorable interest rates are and will remain important. Nevertheless, real estate buyers should not only select their financing according to this criterion. A study by FMH Finanzberatung shows why flexibility is more important than ever – and which banks offer the best adaptable loans.

Just a year ago, real estate buyers often had little time to compare financing offers. If you didn’t want to risk the house going to someone else, you had to sign the loan agreement quickly.

Luckily those times are over. However, the background, namely rising interest rates, is unpleasant from the point of view of prospective buyers. At least, however, the development means that the demand for houses and apartments is dropping somewhat and buyers can again make a well-considered decision for or against a specific financing partner.

The interest rate usually plays the most important role. On the one hand, this is understandable, because even a tenth of a percentage point more or less makes a huge difference in costs over the entire term of the loan. On the other hand, interested parties should also consider another important point, recommends FMH, namely the flexibility of the selected loan.

If the past few months and years have shown one thing, it is how quickly economic and personal conditions can change from the ground up. A good building loan must therefore not only be cheap, but also be adaptable to the living conditions of the borrower.

On behalf of ntv, FMH-Finanzberatung determined which banks offer optimal conditions in this segment. The Frankfurt experts not only considered the commitment interest, but also the possibility of making special repayments and changing the repayment amount. The following example shows why the last point is so important.

A family financed their own home two years ago. In view of the low interest rates at the time, a repayment rate of four percent per year was agreed. The sum of 1,300 euros for a loan of 350,000 euros was still easy to manage back then. Unfortunately, the energy crisis has meanwhile meant that said family has to pay three times the additional living expenses. It is very relieving when the loan agreement allows the repayment rate to be reduced to two or even one percent. In this example, each percent of the repayment rate means almost 300 euros less in financing costs per month. Therefore, care should always be taken to ensure that financing is based on life – and not life on financing, according to FMH.

First of all, it is important to make provisions for the worst case – a financial bottleneck. Therefore, the possibility of lowering the repayment rate is also the more important option than increasing it. Because customers can easily get a faster repayment with special repayments. If, on the other hand, the necessary money is missing to shoulder the previous installment, the possibility of reducing it is elementary, even if this increases the financing period and overall costs.

Pleasing: Many banks now even allow the repayment rate to be changed several times during the fixed interest period. Two to three adjustments are usually possible. Some providers allow even more, but then charge money for this service – be it in the form of a one-off payment or an additional interest rate.

FMH considers the one-off payment of up to 250 euros to be the better solution, because the amount is only due if the customer actually uses the option to make the adjustment. Buyers, on the other hand, pay the interest premium in any case – and have to dig much deeper into their pockets overall.

In order to determine the best providers of flexible building loans, FMH awarded 50 percent of the points for the possibility of changing the repayment in its current assessment, the remaining 50 percent were divided between commitment interest and a special repayment option.

The result: The winners among the nationwide providers are Signal Iduna, DEVK-Versicherung and 1822direkt. Sparda-Bank Südwest and the small PSD Bank Koblenz, which even managed to outperform Sparda-Bank Hannover, which was rated “good”, shine among the regional banks.

You can find the best building rates including flexible conditions in the ntv building loan comparison.

(This article was first published on Monday, November 28, 2022.)