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In principle, one thing must be anticipated in connection with the real estate loan : The classic instant loan actually belongs to the area of consumer finance.
Even the framework conditions for the instant loan and the construction loan differ considerably.
Framework conditions for instant credit
The general conditions for an instant loan differ significantly from those of a classic construction loan:
- Real estate loans are often issued from 50,000 USD upwards. The instant loan already reaches its maximum possible limit here.
- Instant loans are rarely extended over 84 months.
Building finance in the six-figure range cannot be reconciled with the typical framework conditions of an instant loan.
Why banks do not issue an instant loan for mortgage lending
Especially when it comes to construction money, credit institutions like to put the brakes on for their own security. Only when all documents are complete and as a lender you get a picture of:
- own resources
- the market value
- the economic situation
- the credit history
a decision can be expected. And before building owners hold the money completely in their hands, patience is the order of the day. If it is a new building, the mortgage lender generally only pays the loan once construction has been completed.
Why builders should register for the instant loan
At the same time, the borrower has to keep an eye on one or the other point when choosing a suitable construction finance. Rigid repayment terms are anything but optimal. On the contrary: the aspiring homeowner should be concerned with holding a flexible financing element in their hands.
The instant loan is usually not the right instrument here. Classic home loans with:
- Special repayment or
- Repayment rate adjustment
offer significantly more scope here. Aspects that should always be kept in mind in combination with the land charge and the additional financing costs.