How is a personal loan different from a real estate loan?
The personal loan is a consumer credit, which basically divides into two categories.
You can use it to finance either personal projects such as a new car, new furniture, new IT material or renovating your home right through to your own wedding. This is called a dedicated, personal loan, d. H. a loan to be settled on a regular basis and linked to a specific purpose. You must provide proof of purchase or prove that your loan is earmarked (for example, a housing renovation cost estimate).
It may also serve to cover unforeseen expenses or cash needs. This is called a non-earmarked loan. H. a loan to be repaid on a regular basis and not linked to a specific purpose. You can use the amount at your discretion. Your project has only a declaratory character.
Personal loan: fixed rate, limited term and loan amount
Whether earmarked or not, the personal loan always has the following characteristics:
It is a fixed rate loan (global APR or GEJZ) with constant monthly repayment installments.
The loan ceiling is 75,000 euros.
The term of the loan is generally between 6 and 60 months.
Term, loan amount and repayment installments are agreed in advance and can not be changed during the repayment term (except in case of early repayment).
Real estate loan: only for living space
The real estate loan differs in many ways from a personal loan. First by the loan purpose:
The real estate loan or real estate loan is exclusively for the purchase of a house or apartment, the construction, renovation or renovation of housing and the acquisition of a building plot.
In addition, about its functioning:
There are three forms of compounding: the fixed rate, the variable, fixed rate and the variable rate. The amount of the repayment installments may change from year to year with a variable interest rate; it can be adjusted at a variable, fixed interest rate after three, five or ten years. With a fixed interest rate, the repayment installments remain constant.
The loan amount can amount to more than 75,000 euros.
The term of the real estate loan is considerably longer: generally it is between five and thirty years.
For a real estate loan, the bank demands higher collateral: the verification of your solvency is not sufficient. In any case, the mortgage is required, the purchased property serves as collateral for the loan granted. In addition, your bank may require additional collateral, such as: For example, taking out a residual debt insurance to secure repayment of the loan in the event of your death.
Personal loan for housing or real estate loan?
Even if the delineation of a personal loan compared to the real estate loan is now somewhat clearer, this does not apply to all situations. You will answer me “And what should I do if I want to borrow from the bank for renovation? Do I have to apply for a personal loan or a real estate loan for housing?
“That depends entirely on the amount of the loan and its duration: If you want to raise more than 75,000 euros, or if the repayment period is more than five years, you must in each Case a real estate loan record. Keep in mind that home loan rates are generally cheaper than a personal loan, but there are other costs such as the mortgage.