In planning, you can also use alternatives, such as so-called annuity loans. The simplest and seemingly cheapest financing method is the annuity loan. The advantage is immediately offset when looking at the credit target, but has the necessary USD left to pay for the desired object immediately out of pocket.

## This is how an annuity loan expires

Anyone who wants to finance a property is usually dependent on an annuity loan in practice. Annuity loans are fixed-rate building loans: annuity loans with a variable repayment rate are a special form of credit. Annuity loans usually have a term of five, ten, 15 or even more years. The classic annuity loans often start with an initial repayment of one or two percentage points or more in low-interest phases.

The annual repayment consists of interest and repayment, this value is called pension. For example, a ten-year annuity loan of $ 200,000 currently costs 2.1 percentage points for interest on borrowings at Lite Lender. If the borrower decides on an initial repayment of one percentage point, the loan amount will be $ 6,200 per annum. Divided by twelve, the monthly rate is 516.67 E.

At the end of the first financial year, the borrower repaid $ 2,019.36 of the loan amount, $ 4,180.64 of the interest expenses. In the case of annuity loans, the monthly repayment is immediately credited to the loan amount. Conclusion: In the tenth year, the repayment portion of the annual installment has already risen to $ 2,439.10 in our example loan, while interest expense has fallen to $ 3,760.93.

First, by choosing a higher initial repayment, if the financial plan is available. For example, if our annuity loan started at two instead of one percentage point of initial repayment, $ 4,038 would have been repaid after the first loan year; in the tenth year, the repayment contribution would be $ 4,878. In this case, however, the monthly rate would rise from 516 to 683 $.

Also, the co-payments made possible once a year are immediately credited to the loan amount and increase the repayment speed. For example, if our annual retirement loan is paid annually at $ 2,000, the residual debt will be reduced by $ 33,030 after ten years. The unscheduled repayments amounting to $ 30 thousand result in interest savings of a good $ 2,000.

## Annuity loan

An annuity loan from our cooperation partner Schwbisch Hall is the ideal solution. The most important characteristic of an annuity loan is that the sum of the installments (annuity) is constant over the duration. The tranche – also known as the annuity installment – is composed of an interest portion and a repayment portion for annuity loans. This interest rate has remained the same throughout the loan term.

Unlike other forms of credit, repayment is initiated immediately. The relationship between interest expense and repayment changes every month as the interest on the remaining loan is calculated. You receive the Best bank loan immediately and pay the agreed interest and repayment installments. The repayment rate can be chosen between 2.0 and 5.0 percentage points and changed up to five times free of charge during the loan commitment1.

What financing options can we plan safely over the years and still remain variable? “You can set the interest rate yourself and adjust it up to five times when borrowing1 If you have a loan commitment of 5 to 30 years, you can finance it from A to Z think it through well.