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Quiz: Which Type of Loan is for You?

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Question 1

How willing are you to take risks?

  • A: Healthy average
  • B: I show courage when it pays off
  • C: I'm a planner--I prefer to play it safe
  • D: I'm a daredevil: Nothing ventured, nothing gained.
  • E: Risk? Not for me, thank you

Question 2

Are you interested in banking and do you follow interest rate developments?

  • A: My interest is average
  • B: Sometimes yes, sometimes no
  • C: I’d rather not
  • D: The financial pages are my favourite
  • E: Bank? Interest? I don't get it

Question 3

Do you prefer long-term planning or are you more spontaneous?

  • A: I like to plan in advance, but I am open to everything
  • B: A bit of both
  • C: I like to plan things through to the end
  • D: I like to decide things intuitively and spontaneously
  • E: Long-term plans scare me

Question 4

Which saying is most likely to apply to you?

  • A: A bird in the hand is worth two in the bush
  • B: Business before pleasure
  • C: No half measures
  • D: The proof of the pudding is in the eating
  • E: Better not to take a chance

Question 5

How would you rate your ability to save money?

  • A: I have some under the mattress
  • B: I'm a piggy bank
  • C: Nothing special
  • D: I always have a little put away for a rainy day
  • E: Unfortunately, zero

What next? Well, the letter that you have chosen most often will tell you which property financing might be the right one for you. See which letter you chose the most, and below you can read about your financing type. Here you will find a financing option for everyone, whether you're a planner, spontaneous, or somewhere in between. However, if the result still is not clear, our financing advisors will be happy to help you.

How much risk can you tolerate? Take our test and find out!

Type A: The forward-looking average type

If you are moderately risk-averse, interested in banking and like to plan ahead, the annuity loan should suit you well. This is Germany's most popular real estate financing, where the interest rate is fixed for a period of 1 to 30 years, depending on your individual needs. The advantages? Security, long-term planning, and no risk of interest rate changes during the fixed interest period. However, early repayment fees may be charged in the event of early redemption. A fixed interest rate could also end up costing more than something more flexible, depending on how high or low the interest rates currently are. Luckily, right now interest rates are historically low, so this is still a financially sound option for many. You benefit from the fact that you always have a little something stuffed under your mattress.

Type B: The calculating saver

Are you a keen saver and willing to invest when it pays off? Then an amortised loan is just the right thing for you. Here, a monthly repayment instalment is first calculated by dividing the respective loan amount by the number of months of maturity. This value is then added to the respective interest portion, which decreases proportionally over time. Despite the high initial financial burden, this results in lower overall costs, as the interest costs fall faster than with an annuity loan. This is perfect for those who have a little more saved and are financially savvy.

Type C: The planner in need of security

For all those who prefer to play it safe and plan things accurately and to the end, but whose ability to save is less pronounced, a full repayment loan is a good option. With a fixed interest rate over the entire term, there is no residual debt, no need for refinancing and no interest rate risk. The exact planning and the elimination of final costs are the clear advantages here. This type of loan is for those who are risk-averse.

Type D: The spontaneous, financially-interested

You don't shy away from risk, regularly inform yourself about the financial world and like to make spontaneous decisions? How about a building society loan? Here you save a contractually fixed minimum savings amount. After a minimum term you can either have it paid out or accept a loan offer that you can use for residential purposes. The advantages: state subsidies such as a housing construction bonus or employee savings allowance are available. In addition, extra repayments can be made at any time and at no additional cost, ensuring your nest egg will be used to your advantage. One disadvantage: if you find your dream property during the savings phase and thus before the loan is paid out, you may have to resort to an additional form of loan. Though this shouldn’t be a problem for you, since you have more than enough background knowledge and know exactly what you want.

Type E: The risk-averse, live-in-the-moment

Are interest, saving and planning foreign words for you? Then you might want to rely on your rental apartment for the time being and let the dream of your own property grow in peace. Buying real estate is a huge financial commitment that shouldn't be taken lightly, and should only be done by those who have some form of savings and financial interest. To learn more about the real estate purchase process, check out our buyer's guide.

Written by:

Ina Schulze

Ina’s heart beats for design, interior and the magic of the (written) word. She commutes between Leipzig and Berlin for love - and is always looking to discover new things about the cities for the EverEstate blog.

We are on hand to discuss any questions you may have about financing your property.
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Olaf Grumm
Head of Finance Consulting
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