Home financing without equity?

When buying a property, it is generally recommended to contribute at least 20 percent – ​​ideally 30 percent – ​​of your own savings. Nevertheless, some prospective buyers are interested in the possibility of 100 percent financing – that is, financing that requires no equity at all. Is that possible?

Full financing requires a high income, financial reserves or additional collateral, and excellent creditworthiness, which can be verified, for example, with a SCHUFA credit check. Banks also examine the property particularly thoroughly when offering full financing, considering aspects such as location and condition. Such a mortgage without equity appears especially attractive to those who cannot quickly provide 20 to 30 percent equity.

The fact is, however, that only a few banks approve this type of financing, and even then only under certain conditions. A broker or financial advisor can offer valuable support in assessing whether full financing is the optimal solution for your personal situation.

What exactly is full financing?

With full financing, also known as 110% financing, both the purchase price and the ancillary costs are fully financed by a bank or savings bank. However, this results in significantly higher monthly payments and increased risk. Whether such financing is possible, safe, and advisable depends on various individual factors.

Full financing requires a high income, financial reserves or additional collateral, and excellent creditworthiness, which can be verified, for example, with a SCHUFA credit check. Banks examine the property particularly thoroughly when offering full financing, paying particular attention to its location and condition.

Opportunities and risks at a glance

Advantages:
With full financing, homebuyers can move into their own home immediately without having to save up, instead of saving for years. This can be particularly financially advantageous with low interest rates and rising property prices. Those who invest their savings elsewhere can benefit further, provided the monthly payments are manageable.

Disadvantages:
Full financing is more expensive due to higher interest rates and monthly payments. Furthermore, a longer loan term may be required, increasing the risk of costly refinancing. Financial difficulties, such as job loss, can become a burden, especially when property prices are falling.

Remaining debt after a sale or foreclosure is a potential risk. It is often more difficult for self-employed individuals to obtain full financing, as they represent a higher risk of default.

Are you looking for support with financing a property? Contact us! We are happy to assist you with advice and practical help!

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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