A home loan is secured by the land register entry, so that the Bank has a lower probability of default than a consumer loan. Since, on the other hand, the amounts for house financing are above average and the utilization of the house often achieves less than the outstanding credit number, domestic banks usually require a Schufa statement without negative entries.
Nevertheless, a home loan can be obtained despite Schufa, if the home builder or home buyer can prove his creditworthiness in other ways. In addition, promotional loans from KfW Bank can also be obtained in most programs with Schufa negative features.
As a home loan is not only the acquisition or construction of a house, but is also used for renovations and modernization of residential buildings.
The promotional loans of Bank
KfW Bank grants development loans for the first-time acquisition of residential property by the applicant and for numerous renovation measures. This is especially true if the house to be renovated is a listed building and significant energy savings.
For renovations, depending on the program, KfW Bank’s development loan will be sufficient to finance the entire project. To finance a home purchase or construction, however, the promotional loan makes only a partial contribution, so that another bank loan is required.
The classic Swiss loan is not eligible as a home loan, as the federal banks limit the loan amount to 3500 to 5000 euros. If only a minor renovation is planned, these amounts may be sufficient. However, the settlement is not as a special house loan with land register entry, but as a classic consumer loan. At the same time, this means that the interest rate that is particularly favorable for secured real estate financing is not used.
A negative Schufa is unproblematic for KfW Bank’s home loans, as the Förderkreditanstalt expressly stipulates in most programs that only a private insolvency as a negative feature leads to the non-award of the requested home loan.
The home loan at a domestic credit institution record
For home borrowing from a financial institution based in Germany, there are different options for bad Schufa which increase the likelihood of a positive credit decision:
- Few domestic banks expressly point out on their respective homepage that they also grant home loans in the case of a soft Schufa negative entry.
- If you have significantly more equity than the usual 20 percent of the construction or purchase price for house financing, some banks rate their holdings of money as a clear indication of improved credit quality, so that home borrowing is possible despite the bad Schufa.
- The chances of a house loan with a weak Schufa increase sometimes, if you are interested in a property in which the bank also acts as a broker. The double revenue from the sales commission and the loan financing increase the readiness for risk with some institutes. This is particularly true for real estate that has been offered unsuccessfully for a long time.
- You take the home loan together with another person who may have a much lower income, but a positive Schufa information.
The house loan despite over a credit broker
In spite of bad Schufa, credit service providers pass requests for home loans partly to domestic financial institutions, but mostly to foreign-based lenders. These generally execute the lending without a Schufa request. They assess the creditworthiness of applicants for home financing solely on the basis of income.
Unlike in Germany, house financing abroad often does not involve long-term fixed interest rates, but rather a variable interest rate. Depending on the development of the base interest rate used, this may make it more expensive or cheaper to borrow during the term of the loan. The calculation of the repayment installments is more difficult than a home loan with a long-term interest rate.
A reputable mortgage lender is recognizable by the fact that he does not charge his clients any up-front costs. Instead, he either bills the borrower for successful money placement or gets paid by the bank. Unlike consumer credit, home loan financing is partly the responsibility of the lender.
Are private loans suitable as home loans?
Organized private loans are eligible for funding for renovations or for simple refurbishment. When financing a home purchase or a house construction, they can hardly be used due to the high sum required. Exceptions are the purchase of a small and inexpensive condominium.
On the private home loan platforms, loan seekers hire a loan request that can be subscribed in full or in part by the members who are registered as lenders. Given the limited number of lenders registered there, house financing through private loans seems unrealistic, even if it is theoretically possible.
However, if the home loan is used to finance a modernization or renovation, there is a good chance of getting the required amount from private individuals. Since many members of the respective platforms pay attention to social criteria in their decisions and prefer to draw requests from people who are difficult to obtain a loan from ordinary banks, a private home loan can be accepted for renovations and modernizations despite Schufa.
In the case of a home loan applied for via a placement platform, despite Schufa, detailed information on the planned renovation or modernization is important. Many private lenders are consciously promoting measures that they consider most useful in their lending decisions.
For some of the platforms, the loan seeker can choose whether to apply for the private home loan without a Schufa request or with an open statement of the existing negative contribution. If only a single negative feature has been forfeited, dealing openly with it tends to result in lending rather than concealment. The reason for this is that private individuals reward extensive information not only about their purpose, but also about their personal situation.