The financial question: When will the annual lease worth

Recently cost loan with a ten-year fixed interest rate only 4 percent per year. These beautiful days are over. That bargain hunter No wonder open to alternatives. And there is.

The great time in the ten-year loans with fixed interest rates only cost 4 percent per year, is over. Today at least 5 percent must be placed on the table for such mortgages each year. These are in a credit of 100,000 euros, which will be repaid over 30 years, monthly while only 59.40 Euro more, but it adds up over time to 21,384 euros, so it is no wonder that bargain hunters always a who listen to alternatives.

An interesting way to save the construction or purchase of a property, the ground lease can be. Here, investors are not owners but tenants of the property. You earn the right for a long time – often 99 years – to use the land. In return, they pay the owner the annual lease. He stood for decades in reputation, especially for families who have to count every penny to be an alternative to the mortgage. Therefore, many parties are working for the strengthening of the ground lease. But critics say that the ground lease was not so favorable. Sometimes it is even more expensive than the mortgage.

The truth lies here in the middle. The leasehold can be cheaper than a mortgage, but if the communities, churches, and foundations tuck in neatly at Erbbau, the benefits there. This is evident in the following example. A father is 35 years old and looking for a plot for the construction of their home. He offered two plots, which each cost 150,000 euros. The first property is offered for 99 years in the long lease, the second property is for sale. The annual ground rent is 4 percent of the land value, or 6,000 euros a year. Alternatively, it can take out a loan over 150,000 euros. For a nominal interest rate of 5 percent and a repayment of one percent per month 750 euros must be paid, and it takes about 36 years until the debts are removed.

When comparing the two offers, it is obvious to add the payments. When Erbbau 99 charges will apply à 6000 euros, makes 594,000 euros. When mortgage rates are 432 à 750 euros due so that together 324,000 euros. This is, at first sight, a difference of 270 000 euros. but on closer inspection, there are even 420,000 euros, because the property passes into the ownership of the investor purchase.

The addition of the numbers is certainly dangerous because of money and time will be misjudged because of the lack of interest. In the present case, it is questionable as to compare maturities of 99 and 36 years. Similarly, it is problematic that different loads, here 6000 euros per year, there 750 Euros, to be treated equally. In order to get the thing under control, the term of the agreements must be adapted on the one hand, and on the other hand, the differences between the two payments should be remunerated.

The biggest problem is the term. The ground lease is granted 99 years, and the mortgage runs 36 years. In practice, the investor will coincide with the two terms on the abdomen. The leasehold is about the death of the investor out, and the repayment period of the mortgage may be too short. The most viable compromise is most likely the personal life of the house. These are in this case probably 50 years if the investor wants to live in the house until death.

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Loans: Building and loan KfW transactions are too colorful

The development bank KfW has a powerful position in banking. The competition is silent so far. But now it is the home loan too much and they come out of hiding.

E in young parents and three children shine in the camera because their houses with the help of a loan from the KfW have rehabilitated. This is the advertising message that can broadcast on major television stations, the state development bank for about a year. So far, this self-promotion of a bank that can even forgive any construction loans directly to the citizens, nor caused no public displeasure in the banking stock. Although the KfW thus setting all consultants of credit institutions locally indirectly under pressure to incorporate the KfW loans in the housing finance with, private banks and savings banks (sitting sometimes even on the board of state-owned development bank), the media offensive accepted tacitly.

The private building societies, however, the business of KfW and their increased self-promotion too much but will now. “A state-owned development bank is needed without a doubt and will have to assume certain responsibilities,” says Andreas Zehnder, CEO of the Association of Building Societies, in an interview with the Frankfurter Allgemeine Zeitung. “But the KfW makes increasingly wide there where there is no market failure, such as in housing,” he complained. That is not the job of those hedged by the state institution takes for himself to complete, primarily “to be substitutive active” – any more than television advertising. “For us, everything is no longer comprehensible,” says Zehnder.

The criticism of the Association chiefs aimed at a very specific part of KfW’s work: the housing allowances. A total of 15.6 billion euros was enough for new loans for these purposes, last year’s development bank. In absolute terms, this sum was later (in 2010 were there 18 billion euros), but measured against the total domestic KfW delivery, the housing allowances will become a share of 30 percent. “This is worryingly high, in 2000 the figure was only 18 percent,” says Zehnder.

And it did not go to building societies around the entire activities of KfW in this field. That a development bank that support politically motivated energy-efficient renovation and remodeling of older homes, was in order. Rather, it is those funds that flow into the classic Ownership Program – nearly 5 billion euros in 2013. Because these KfW loan can reach up to 50 € 000 per applicant, if they were in direct competition for building savings, Zehnder admits frankly. “There is also a large part of our business takes place about 30 to 40 percent. That hurts us, “he says. “We would like to see a commitment by the KfW to hold back on this field.”

In the development bank to confirm the numbers, but has a different look. On the one hand, the proportion of classical promotion of home ownership had fallen steadily, from 7.5 billion Euros in 2003 to last another 4.5 billion euros. Secondly, the KfW fill them with their housing allowances, the political will of the federal government. Energy-efficient construction and renovation belong just as important as the promotion of home ownership, “which contributes to capital formation and private pension,” it says. In addition, in 2011 and 2013 bullet variants were introduced into the KfW Housing loans “to ensure better compatibility with the loan products.” Although the voice, it is said of the private building societies, but not alter “the general competitive disadvantage compared to the State Bank KfW”.

That the development bank may rely in their actions on a government contract, the building societies are aware of – which is why Zehnder sees his criticism also an indication for the policy. In the coalition agreement of 2009 have not been explicit that KfW is due to their original business purpose, such a requirement missing unfortunately in the current paper, he says. Live better with the powerful development bank, building societies could also, if the federal government is, as before, an increase in the rate of home ownership would write (now 43 percent) on the flags, he adds. “Then all the forces would be required.”

That the private building societies now attack the first the strong position of KfW, amazed at first glance. Because Wüstenrot, Schwäbisch Hall & Co. celebrated a record year in 2013, the number of new contracts increased by 8.5 percent to nearly 2.3 million units and the associated savings target by 7 percent to a maximum value of 70.1 billion euros. In the ranking of housing finance, the (private and public) building societies take second place behind the clear leading savings banks with a market share of 21 percent. But 2013 was “an exceptional year”, says the association.

Meanwhile, her mood has deteriorated again, in particular, because of the generally low-interest rates. Once a year, the association asks the savings willingness of citizens, and in 2014 had fallen to its lowest level since the survey in 1997 their savings pleasure, it said. To suspect that the building society in 2014 is noticeably lag behind the beautiful figures of the previous year is thus.

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