
Money worries: Is selling your property the right way to go?
When you buy a property, you are entering into a long-term financial commitment. Not only does the mortgage have to be paid off, but experts also recommend setting aside a reserve for maintenance. In most homeowners' associations, a maintenance reserve is even mandatory. The amount of the lump sum depends on the age of the property. The older the property, the more likely it is that repairs will be necessary and the more owners should set aside. Recommendations range between 5 and 10 euros per square meter per month, depending on the age of the property.
What should I do if I don't have the money for renovation?
But not all owners think about regular savings. When the roof starts leaking or the old heating system breaks down, this can lead to serious financial problems. The costs for such repairs are usually in the tens of thousands of dollars. The good news: It is possible to take out a loan from the bank for renovations. Energy-efficient renovations are even subsidized by the government in some cases. Roof renovations, for example, can be subsidized by the Kreditanstalt für Wiederaufbau (KfW) as part of its "energy-efficient renovation" program.
However, it is only advisable to take out another loan if you are not already having problems with your monthly mortgage payments. For example, a construction loan can only be used to finance a new roof if at least 80 percent of the mortgage on the property has been paid off. Otherwise, financing is also possible through a special renovation loan. However, the interest rates are usually higher in this case. It is therefore important that property owners carefully consider whether they can bear these additional costs.
What should I do if I can no longer afford my financing?
After a divorce or job loss, it is often the case that property owners can no longer afford to pay off their current loan. In such a case, it is important to contact the bank as soon as possible and look for a solution. If it is only a short-term payment problem, it is often possible to suspend repayment for a few months or to refinance the loan. However, if you simply stop paying, you risk foreclosure and high fees for early termination of the loan. In the worst case, the proceeds from the foreclosure sale will not be high enough to pay off the debt to the bank. This could lead to personal bankruptcy.
So if you know that you will not be able to pay off your loan in the long term, you should not only talk to your bank, but also seriously consider selling your property. This does not necessarily mean that your dream of home ownership is over. Some real estate agents offer the option of a property swap, for example. In this case, two property owners are brought together. So if you are having problems financing your large house, you can swap it for a smaller property that is cheaper to finance.
For older property owners, property retirement is also an interesting alternative that allows them to continue living in their property while supplementing their pension. This involves selling your home but retaining the right to live there.
In any case, it is advisable not to attempt the sale on your own, but to bring an expert on board. A professional real estate agent will usually achieve a shorter sale time and help you sell at a market-driven price.
Are you experiencing financial difficulties and considering selling your property? Contact us now. We will advise you on your options with no obligation.
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