The capital requirements of banking supervision also apply to private individuals. When the favorable purchase of loans, two things are important. The borrower must know what he wants, and he should know the bond market.
When the favorable purchase of loans is two things important. The borrower must know what he wants, and he should know the bond market. Unfortunately, it looks in practice is different. Most individuals have no idea how the mortgage should be designed, and inform them in front of borrowing too little about the current yields on debt securities. Therefore, it is no wonder that the banks have taken the magazine in the past in hand, and in the near future, the Institute will tighten the reins on.
The credit sellers need from 1 January 2007 when the capital requirements of the Banking Supervision (Basel II) apply, the planned investments depth than previously tested. You have to ask exactly the equity and collateral. The results of the analyzes are incorporated in individual offers. That is in plain text that financing will die from the rod. Instead, offers will dominate, which reflect the creditworthiness of the prospective buyers. This applies not only to corporate clients but also for private individuals.
Three points lead to credit
Basel II is difficult to compare the loan deals, and against this background are the basics of the margin calculations of the banks of great benefit. They are based on cash flows so that it arrives in the future on three things. First: The investor needs to know how he wants to pay off the debt. Second, information about the current bond market is indispensable. Third: The investor should estimate “sober”, it represents what level of risk for the bank. The linking of the factors is evident in the three examples.
In the first case, it is about a couple that needs 200,000 euros for the purchase of an apartment house. The building will cost 500,000 euros, and the two investors are civil servants. Since not much can burn: equity of 60 percent, secure income tenants solid addresses! In such loans, not only the risks but also the margins are low. Here is a mortgage with a ten-year fixed interest rate is currently offered for a maximum of 4.6 percent per year.
When the term should be a total of 20 years and is expected in the second half with a connection rate of 6 percent, the contract must be equipped with an early repayment of 3.2 percent per year. This results from the bank’s perspective to a “safe” cash flow, which consists of three elements. Initially, 200,000 euros will be paid, followed by 120 monthly returns of each 1,300 euros, and after ten years the remaining debt still amounts to 119,000 euros. The effective interest rate of this series of payments of 4.7 percent per year.
Whether the credit will be extended, is in the stars. Therefore, the bank can only expect the first rate fixation section. Bonds with a maturity of one year costs at the moment about 3.4 percent, and mortgage bonds with a maturity of ten years account for around 4.1 percent impact. This is calculated for the bank a fixed interest rate of 4.07 percent so that the current margin – the difference to the effective interest rate – is just 63 basis points, equivalent to a yield of 8.250 euros.
The range is lean. Therefore, it is no wonder that banks think in such situations through viable alternatives. In this case, a fixed loan can be offered to the couple, for example, which is repaid at maturity with the help of an investment fund. The solution is for mutual benefit. The couple lowers the effective interest financing after taxes of 3.18 to 1.83 percent if the mutual fund yields a return of 6 percent, and the bank increases the NPV margin of 10,351 euros because the merit gushing from two sources. The festival loans raise 9,261 euros off, and the initial charges bring 1,090 euros.