Is a home loan feasible without equity?
That’s fine. However, for a home loan without equity, you must have certain requirements, for example:
- an above average income
- an excellent credit rating (verifiable by an impeccable credit check score),
- a property for sale in very good condition and in the best location.
In these circumstances alone, banks grant you a home loan without any capital of your own. In addition, each bank assesses the initial situation differently: some banks apply stricter criteria when it comes to equity-free house loans, others are more tolerant in this regard. In this respect, it is always important to compare offers and talk to the banks if you want to tackle such a plan. It is particularly important to compare the offered interest rates with each other. Our building interest calculator gives you a first impression of the current interest rate. It issues up-to-date sample conditions from our banking partners for your financing.
Good income brings cheaper home loan interest
An important consideration here is: the higher and more secure your income, the better the interest rate you get. Since banks already charge higher interest rates for home financing without equity, this makes a decisive difference. In our article on the subject of mortgage lending without equity, you can see from the example calculations that even small deviations in the interest rate can directly save several thousand dollars on a home loan.
The risks of home loans without equity
Financing without equity poses risks, but what are they specifically? The risk of no longer being able to service financing through unforeseen circumstances, such as sudden unemployment, is just as high for a home loan with equity as for a variant without equity. However, in the event of a compulsory auction, your own funds cushion the consequences better. Because the likelihood of remaining on higher debts is lower with a home loan with equity. One should not underestimate this factor. It is therefore extremely important to put your home loan on a secure footing right from the start.
Let our specialists for mortgage lending advise you: They show you whether the risk of a home loan without equity is acceptable to you and, if necessary, find the right bank partner with a low-interest offer for your plans.