A conversation at the kitchen table can sometimes clarify more than many hours of research on the internet. This was also the case during our Kartheuser kitchen conversation with construction financing expert Michael Meier. For over 20 years, he has been helping people on their way to owning their own home—with independent advice, a large network of banks, and a clear goal: to find the best possible financing for his customers.
Let's take a look at the most important questions surrounding the topic of construction financing – practical, understandable, and with a dash of everyday relevance.
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A mortgage is not a sprint, but a marathon. It must fit into your life in the long term – today and in 30 years. But how does a mortgage actually work?
You have found your dream home. Now the question is how to finance this dream. Unlike a traditional installment loan (e.g., for a car), a mortgage involves large sums of money – often several hundred thousand euros. These are repaid over decades. To help you keep track of things, these terms are particularly important:
- Fixed interest rate
You determine how long your interest rate will remain unchanged – 10, 15, or 20 years are common. Longer terms give you more security because your monthly installment does not change – but they usually cost a little more in interest. - Repayment
This is the portion of your monthly payment that actually reduces your debt. Standard: 2% per year. More repayment means you become debt-free faster – and pay less interest overall. - Remaining debt
At the end of the fixed interest period, there is usually an outstanding amount that you can either refinance or repay directly. Important: plan your follow-up financing in good time! - Interest rate risk
Once the fixed interest period expires, the interest rate may rise – no one knows how high interest rates will be in 10, 20, or 30 years. Life changes (job change, parental leave, divorce) also affect your financial situation – you should take this into account from the outset. - Special repayment right
Many banks allow you to repay up to 5% of the original loan amount per year – voluntarily, not mandatorily. This allows you to reduce your debt flexibly if, for example, you receive bonus payments or inheritances. - Special termination
If you have chosen a fixed interest rate that is longer than 10 years (e.g., 15), then you as a customer have a special right of termination vis-à-vis the bank. This is regulated in § 489 BGB (German Civil Code) and states that you can terminate your loan at any time 10 years after full payment with a notice period of 6 months. Of course, the bank cannot do this in return, and you should only do so if you have found and been approved for other/better financing beforehand.
Nominal interest rate, effective interest rate—what do these terms mean?
Confused about interest rates? No wonder. The terms nominal interest rate and effective interest rate appear in every financing offer – and sound quite technical at first glance. But the difference is easy to explain:
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Nominal interest rate: This is the "pure" interest rate that the bank charges for your loan. This interest rate is used to calculate your monthly installment, i.e., your annuity, together with your repayment. Example: You borrow €100,000 and the nominal interest rate is 3%. This means you pay €3,000 in interest per year, or €250 per month. Added to this is your repayment – e.g., 2% (€166.67 per month). This means you pay a total of €416.67 per month.
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Effective interest rate: This includes additional costs that are inevitably incurred in connection with a mortgage, e.g., for the land registry entry of the so-called real estate lien (which secures the bank), notary fees, court costs, and in some cases also the obligation to take out home insurance. Even if these costs are not paid directly to the bank, it must include them in the effective interest rate. The effective interest rate is therefore always slightly higher than the nominal interest rate and shows the total cost of the financing as a percentage.
Important to know: The effective interest rate is intended to ensure transparency and make different offers comparable. In practice, the difference between the two interest rates is usually small.
Michael Meier advises: "The nominal interest rate is often sufficient for comparison purposes, as reputable banks hardly ever have any hidden costs. If you want to know the exact figures, you can of course also refer to the effective interest rate – especially for more complex financing arrangements or combination products such as building society savings agreements."
A tip: For traditional construction financing without extras such as building society savings, the nominal interest rate is a reliable indicator of your monthly expenses – and therefore crucial for your household budgeting.
How can I influence the interest rate?
The good news is that you can actively influence your individual interest rate. There are various factors that can have a positive impact on interest rates:
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More equity:
The lower the loan amount in relation to the property value, the better the terms. Rule of thumb: if you borrow less, you pay less interest. Important: don't spend everything—you should keep 3–5 net monthly salaries as a reserve for unforeseen circumstances. -
Faster or higher repayment:
If you are willing to choose a higher repayment rate, many banks will give you an interest rate discount – and you will be debt-free sooner. -
"Green discount" for energy-efficient properties:
If you buy a property with a particularly good energy balance (e.g., primary energy requirement below 50), banks may grant an interest bonus. Such ESG or eco-criteria are increasingly being promoted – and are doubly worthwhile: through savings in energy and financing.
How are interest rates developing?
Interest rate developments are currently characterized by a great deal of uncertainty. Although the European Central Bank (ECB) is lowering key interest rates in isolated cases, construction interest rates are rising noticeably, even in the short term. Despite the expected ECB interest rate cut, the market is reacting nervously. Special government funds and rising government debt are acting as accelerants. The DAX, Germany's most important stock index, rose significantly – a sign that the market is anticipating high investment and thus rising interest rates.
For anyone looking to buy, this means securing your financing early, before interest rates rise further. In the medium term, Michael Meier expects interest rates to remain stable at 2–4%.
Our tip: Calculate your financing so that you can also cope with an interest rate of 4%. Together with a repayment of 2%, this results in an annual burden – your annuity – of 6% of the loan amount. Example: For a loan of €300,000, this would be €18,000 per year or €1,500 per month. This calculation helps you stay on the safe side – even with future interest rate increases.
Special repayments, building society savings, etc.
Flexibility is key. Many banks offer the option of making special repayments of up to 5% of the loan amount each year. This means that you can repay more, but you don't have to.
And building society savings agreements? These can be useful for securing low interest rates in the long term. Michael Meier recommends: "A building society savings agreement only makes sense if it fits into the overall package and can be realistically saved."
Example: You take out a loan of €100,000 and know that after 10 years, €70,000 of the debt will remain. To protect yourself today against possible interest rate increases in the future, you could take out a building society savings agreement for €70,000 at the same time. This is saved monthly – rule of thumb: approx. $3 per $1,000 loan amount. In our example, that would be $210 per month. This amount is added to the normal loan installment, which means a higher monthly burden overall. Advantage: After 10 years, the building society savings agreement is available to you to pay off the remaining debt – at an interest rate fixed today.
What does construction financing cost me on average?
In addition to the purchase price, there are other costs associated with buying real estate—the so-called incidental purchase costs:
| Type of cost | Percentage of purchase price |
|---|---|
| Land transfer tax in North Rhine-Westphalia | 6.5 |
| Notary and court costs | Approx. 2 |
| Broker commission (including VAT) | 3.57 |
Example: For a purchase price of €300,000, there are approx. €36,000 in additional costs. You should be able to pay these from your own capital. You also need to look at the property: do you want to and do you need to do anything? With an existing property, there are of course additional renovation costs, etc.
Financial advice: What will it cost me?
Nothing. Michael Meier's advice is completely free of charge for you. You do not sign any restrictive contracts and do not pay any fees. His commission is paid by the bank – not you.
Advantage: He is in the same boat as you. Only if you receive a suitable offer and decide to accept it will he earn a commission. Instead of running from bank to bank yourself, he analyzes the entire market for you, compares offers, and presents the best options—tailored to your individual project.
This is how a consultation with a financial advisor works
Before we begin, you will receive pre-contractual information —a legally required document that informs you about the collaboration. As soon as we start working together, a brokerage agreement will be concluded—transparent and with no hidden costs, of course.
1 - Getting to know each other
First, it's all about you: the focus is on your income, expenses, and life plans. Michael Meier puts it bluntly: "Financially, you have to bare all." Because only those who know exactly how much money they have available each month can plan seriously. Questions about your standard of living, future developments (e.g., family planning, job changes), and personal wishes also play a role here.
2 - Needs analysis
What would you like to buy? An apartment or a house? Where is the property located, does it need renovating, or are there any planned modernizations? Michael Meier transparently calculates all additional purchase costs and checks which additional costs (e.g., energy-efficient renovation) are realistic. In doing so, he also takes into account your individual financial situation and your risk tolerance.
3 - Financing concept
On this basis, Michael Meier creates a tailor-made financing concept. He uses two comparison portals that cover almost all banks in Germany and checks: Which bank is best suited to your project? What terms and conditions are possible? Are there any special discounts (e.g., for energy-efficient properties)? He also checks which banks are open to your specific situation (e.g., self-employment, fixed-term contracts) and gives you honest advice on which options make sense—and which don't.
4 - Documentation service
When you buy property with Kartheuser Immobilien, you benefit from short communication channels: all property documents are forwarded directly to Michael Meier, so you don't have to worry about a thing. He also supports you with external purchases—for example, by contacting sellers or other brokers directly to obtain the necessary documents as quickly as possible. The advantage: with complete documentation, your financing can be reviewed and approved quickly—often faster than with a traditional bank.
Kartheuser Immobilien: Your path to home ownership begins with the right partner
The path to owning your own home doesn't have to be complicated – as an independent construction financing expert, Michael Meier will accompany you from the first meeting to the move-in – personally, transparently, and completely free of charge.
Thanks to our close cooperation with Kartheuser Immobilien, you benefit from short coordination channels, fast provision of all documents, and advice that is tailored entirely to your needs.
What you can expect from us:
- Individual needs analysis
We listen carefully and find properties that really suit your ideas and your life. - Wide selection & strong network
Whether you are looking for a house or an apartment, our extensive database and valuable contacts in the region open doors that often remain closed to others. - Regional market knowledge
We know Mettmann, Ratingen, and Velbert like the back of our hand—and know exactly where your dream property is hidden.
Ready to take the first step?
Then let's talk—no strings attached and in person. Start your dream of owning your own home with us now!
