Debt Consolidation: Choose the perfect loan

Colloquially, the terms loan and credit are very often used interchangeably. For the consumer, this is a money lending from banks or private individuals for which a corresponding interest rate is charged.

On the other hand, banks already make a distinction between loans and loans. For example, loans are a sub-type of loans that are usually issued over a longer period of more than five years. There is a distinction between different loan types.

The classic annuity loan

The annuity loan is the standard form when it comes to financing a property. The borrower pays a fixed monthly installment, which consists of an interest and a repayment installment. In the annuity loan, the interest rate is fixed for a certain period of time. A fixed rate of 15 years is usual, although shorter or longer periods are possible. If the loan is not repaid during this period, follow-up financing will be provided. The amount of the initial repayment can be chosen freely by the borrower. Most banks, however, require a repayment installment of at least one percent. The monthly installment reduces the interest component and the repayment increases to the same extent.

Another classic: the mortgage loan

Another classic: the mortgage loan

Mortgage loans are long-term loans that are secured by real estate liens. The property serves the bank as collateral for the granted loan. The offered interest rates and repayments depend on various factors. These include:

  • the recoverability of the property
  • the existing equity
  • the occupational situation of the borrower.

To be able to repay the loan more quickly, special unscheduled repayments should be agreed upon completion of the loan. This is recommended higher initial reductions than the industry-standard one percent.

Long term plan with a Volltilger loan


In the Volltilger loan, the borrower also pays a fixed monthly installment, with an interest and principal portion. However, no repayment rate is specified here. Instead, the borrower indicates when he wants to be debt free. This then results in the required repayment. The shorter the chosen term, the higher the repayment and monthly installment. Due to the mostly higher repayment often fuller loan loans are offered cheaper interest rates. In addition, the borrower receives absolute interest rate security as no follow-up financing is required. However, due to the level of installments, this type of loan is only suitable for persons with a very high income.

Securing Loan for Later: The Forward Loan

Securing Loan for Later: The Forward Loan

In the case of a forward loan, the loan amount will only be paid out at a later date. In this way, builders can take advantage of the currently favorable interest rates, even if the loan is not needed until the next five years. Still, a forward loan is always a speculative thing. After all, no one knows exactly how interest rates will develop over the next few years. If the interest rate level falls, then the borrower pays too much. There is also an interest premium, depending on how early the forward loan was concluded.

For risk-averse: the variable loan

In the variable loan, the interest rate is not fixed for a certain period of time. Instead, the interest is linked to the EURIBOR. This is the reference rate at which banks can lend each other money. The EURIBOR may change every three months with the interest rate of the loan always being adjusted accordingly. As interest rates increase, so too do the loan costs. If the interest rate level goes down, the borrower benefits from falling costs.

Limit risk with a cap real estate loan

Cap loans are real estate loans with a variable interest rate, but with a risk brake built in. When the loan is concluded, an interest cap, the so-called cap, is agreed. In this way, builders can keep their costs in check even with rising interest rates. However, in most cases the borrower has to accept a higher interest rate.

Loans without equity with full financing

With full financing, even persons without equity can fulfill the dream of their own four walls. Meanwhile, more and more banks offer a real estate loan even without equity. However, the thing also has a catch. For mortgage lending, the lower the equity, the more expensive the financing will be. Without equity, the risk to banks is significantly higher, which translates into a higher interest rate. In order to be able to afford the monthly installments, a very high income is needed.

Housing loans for property owners

The housing loan is a special form of the classic installment loan. Such a loan is offered to owners of self-occupied real estate. In comparison to installment loans, home loans are much cheaper. However, the costs are higher than with a real estate loan. One of the advantages of the home loan is that the bank does not leave any land charges as collateral. Special repayments can usually be made for a small fee. The housing loan is intended primarily for modernization measures or as follow-up financing if the capital requirement does not exceed EUR 50,000.

Always compare loan offers

Which loan is best depends on the individual case. Regardless of the option chosen, borrowers have a large number of offers available. These should be compared in advance exactly with each other. Due to the usually very high loan sums, even small interest rate differences have a significant impact on the cost of a loan.

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