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Home financing and personal loan redemption

Many have a desire to own their own home. But what if a loan has just been taken out or is still to be paid off? The fact is that financing a home with a high mountain of debt is not easy - because the higher the current loan, the lower the chance of another one.

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The dream of your own home

However, in order not to wait until the end of the current personal loan, it is advisable to replace the personal loan. The reason for this is that you hardly get any money for your investments in the current phase of low interest rates, since the loan interest is probably higher than the interest on savings or the interest on an investment.


Risk in financing your own home with a personal loan at the same time

The possibility of financing your own home and continuing to pay off the personal loan is not excluded – but not without a catch. Because if you get a home loan despite old liabilities, you have to pay the new installments for your home in addition to the installments for the existing loan. The double burden always entails a risk, since on the one hand different monthly installments are rather confusing and the two installments must never exceed the financial means.


personal loan redemption

As a result, replacing the existing loan is the safer and easier solution. So by taking out a new home loan, you will be able to use the money to pay off the old personal loan. This debt restructuring means that you only have to pay a single installment for the new home loan. As mentioned above, it is worthwhile when the interest costs for the remaining loan are higher than the interest for the new loan and the prepayment penalty.


Collect and examine

However, nothing comes from nothing. Lower interest rates for the home loan sound good, but you have to do a little something in advance so that everything works as expected. In the first step, all the relevant documents for the personal loan from the bank should be collected, the conditions read and interest, effective interest, the current monthly installments and the term of the contract noted. It should also be checked whether there is a prepayment penalty for the premature termination of the contract and, if so, how high this and the remaining debt are together. You can then calculate the amount that should flow into the home financing. Together with the purchase price including the incidental acquisition costs, the necessary loan amount is then obtained. Only then can you calculate whether you can afford the loan.


The bottom of the facts

If the prospects of owning a home are good despite the personal loan, other factors are also decisive for the actual implementation of the plan. You must have a long-term stable credit rating and your respective Schufa score should be impeccable. It is important that the entire financing process is stress-free and error-free. To ensure this, you are welcome to consult us - we will provide you with expert support in your dream of owning your own home and can explain all the important aspects of paying off your personal loan. All this so that you get the cheapest and best financing for you, tailored to your financial needs.

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