You have found your dream home – but can you afford it over the long term? In order to clarify this at an early stage, an affordability assessment can be carried out. Everything you need to know about this is explained here.
The role of affordability in purchasing residential property
An affordability assessment indicates whether you can also afford your desired property over the long term. To calculate affordability in each individual case, the upkeep costs of the property are compared to your income.
As a rule of thumb: a property is considered affordable if the monthly costs do not exceed a third of your gross incomye. Mortgage providers therefore see your income as an important criterion in determining
whether or not you can be granted the mortgage you want.
How affordability is calculated
The monthly costs incurred for the affordability calculation comprise the imputed interest, the amortisation costs and the ancillary costs for your property.
- Imputed interest rate: Mortgage institutions use the so-called "imputed rate of interest" for the affordability calculation. At 5%, it is higher than the current rates, so the costs for the mortgage are noticeably higher when calculating affordability than in the actual mortgage offer. In this way, the financial institutions ensure that the financing remains affordable for you even when interest rates rise.
- Amortisation: The costs for repayment (amortisation) of the second mortgage are also factored into affordability.
- Ancillary costs: Ancillary costs comprise the maintenance costs of a property. These include insurance premiums as well as heating and electricity costs.
With the affordability calculator, you can find out in just a few clicks and based on your personal criteria whether you can also finance your dream home over the long term.
We help you to finance your dream home
We offer you professional advice from the start to the end of your financing and support you on your way to a self-determined life in your own four walls.
Our advice offers many advantages for you:
- We take a comprehensive look at your personal and financial situation and work out your optimal financing concept – together with you.
- We show you a large number of mortgage offers from different providers – transparently and in real time.
- We will work out a tax-optimised amortisation model for you.
- We accompany you to the fulfilment of your dream home and beyond.
Mortgages offering best rates
Read here how to get the mortgage with the best interest rate for you.