What installment loans mean for mortgage lending

Never before have installment loans been so widespread. The direct banks in particular have made access to cheap credit much easier, and within minutes financing has been requested online. At the same time, the conditions were never so attractive. Due to the low market interest rates, many people can not resist the low lending rates.

But as practical as loans may be, they can be a problem as part of mortgage lending. Banks look very carefully at the credit check: before granting a real estate loan, they want to make sure that the borrower is able to repay his loan without difficulty.

Impact on creditworthiness

Impact on creditworthiness

The problem already indicated is that installment loans do not improve creditworthiness, but rather worsen it. After all, with the borrowing sent a clear signal: The person can not afford certain things and therefore relies on funding. Especially as a result of monthly loan installments have to be made, which in turn burden the budget. Banks must therefore scrutinize whether there is still sufficient room for a real estate loan.

However, installment loans are not necessarily negative. It also depends on why they are taken up. Who makes a meaningful investment, for example, by a car is purchased to get to work with it, usually has not much to fear. The same applies to loans that were taken for educational purposes and, for example, served to finance the study.

It always depends on the individual case

It always depends on the individual case

We can not make blanket statements as to which installment loans are now considered good or bad. In the end, it always depends on the individual case. For example, it is important to know how much the monthly loan installment is and how high the income is. If you want to find out more and find out if you can afford a real estate loan, then please send us an inquiry. Our consultants are happy to help without obligation and free of charge.

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