Euribor simply explained
Real estate financing: building the foundation now
• The key interest rate used by banks in the eurozone for lending • Basis for interest rates on housing loans (e.g. 3-month or 12-month Euribor) • Close connection with prime rates – a change in the key interest rate by the ECB generally leads to a similar, direct change in the Euribor
Variable interest rates
Fixed interest rates
• The interest rate is adjusted continuously (generally linked to the Euribor) • Advantage: A decline in the Euribor also leads to a decline in the repayment rate • Risk: An increase in the market interest rate leads to a higher interest rate and total costs
• The interest rate remains constant for the agreed term (e.g. 10, 15, 20 years) • Advantage: Plannable monthly rates and high budget security • Disadvantage: Generally higher initial interest rate than for variable financing
In Austria, the purchase of investment apartments is closely connected with solid financing. Interest rates have stabilised after the strong fluctuations in recent years and resulted in more reliable conditions for investments. The persistent supply shortage on the apartment market has also led to an increase in the value of housing. The basic structure of real estate financing is clear: A loan covers the large part of the purchase price, while equity provides a major foundation for stable financing conditions. Careful planning is decisive to benefit from stable rental income and value appreciation.
and provide an initial orientation for interest rates, repayment periods and financing op- tions. Personal advising is, however, central for a well-founded decision. This information can be provided by the borrower’s bank, which is already familiar with the individual’s financial situation, or by an independent financial advisor who compares various offers and can frequently obtain better conditions. Financing normally follows a clear procedure. In addition to information on the property, the employment relationship and other personal
ility of the property on this basis and then prepares a financing offer.
The best offers for fixed interest mortgages in Austria currently equal approximately 3.3%. Variable financing generally reflects a lower level but is connected with higher fluctuation risks. The overall planning should also include additional costs like proces- sing, land registry recording, notarised certification and appraisals.
Financing remains the key to investment apartments. Increasingly stable interest rates and the rising demand for housing create attractive options for investments in a market characterised by long-term stability.
documents are required. The bank evaluates the buyer’s creditworthiness as well as the recoverab-
Digital comparison platforms and AI-sup- ported tools are becoming more important
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