How much of your own funds do you need for a home loan?
When buying a property or building a house, you should be able to finance a certain portion yourself. This is what is known as your own funds.
Why Equity?
Those who contribute their own funds when purchasing real estate enjoy many benefits, because equity is the foundation of any favorable home financing arrangement. It reduces the loan amount and, consequently, the monthly payment. In addition, having more equity allows you to secure lower interest rates and generally better financing terms, since you represent a lower financing risk to the bank.
Keep a portion of your savings in reserve for unexpected expenses
How much equity?
As a rule of thumb, you can assume that the bank will finance up to 90% of the property’s value or the purchase price. This means that you should have at least 10% plus the ancillary costs (real estate transfer tax, registration of ownership in the land registry, real estate agent, contract drafter, notary, lien registration fee, etc.) in the form of your own funds. Incidentally, these incidental costs range from 9% to 14%, depending on the case. Furnishings and other items that the bank does not consider to add value are also not included in the loan and must be covered with your own funds.
Don’t have enough funds? Talk to our loan specialists. We’ll find a solution.
What are own funds?
Equity includes, for example, savings accumulated through home-equity savings plans, as well as all balances in savings accounts, securities, gold coins, and real estate holdings. Financial assistance from parents and relatives, as well as your cash reserves, also count as equity. You can also count the expected proceeds from the sale of your current home as equity.
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Financing Without Equity?
The basic requirement for financing without a down payment is a steady and reliable income. It’s best to discuss the remaining requirements directly with one of our financing professionals.
Take advantage of the expertise of the B-Quadrat loan brokers
Can I supplement my equity with my own contributions?
If you don’t have much of your own money to contribute, you might be good with your hands—which can work in your favor: Painting, wallpapering, and tiling are ideal for DIYers! If you contribute part of the construction costs yourself, this personal contribution can sometimes help you secure more favorable loan terms.
Here’s how it works: Draw up a cost breakdown for the work you plan to do yourself—and our loan experts will negotiate your “sweat equity” mortgage.
