Correctly assess your own financial strength

The most important basis for a home loan is a fixed and regular income of an appropriate amount. But what does "at an appropriate level" mean? When it comes to a mortgage, there is a rule of thumb that states that the monthly costs should not exceed 40 % of net income.

Somewhat more difficult is the calculation with less regulated income. Self-employed people, for example, who are still in the start-up phase, find it difficult to estimate future cash inflows. In case of doubt, a more conservative cuatious estimate of your own income is recommended.

However, it is not only income that is crutial when assessing one's own financial strength. Equity also plays an important role. This includes assets, such as e.g. cash reserves, shares, bonds, home savings contracts, insurance, existing real estate and land.

While income is set a percentage limit of 40 % of the net amount, which the monthly mortgage costs should not exceed, in the area of equity you can set a minimum of 25 % of the total costs that should be covered by equity. So if you as a self-employed person can not necessarily rely on a fixed monthly income, you still have realistic chances of a construction loan if you have a correspondingly high equity capital.

Most importantly is that you do not overestimate your own financial strength, but really evalauate it realistically. This first step is the basis for the further path towards suitable home loan.