Loan without entry in the land register.

Real estate loans are generally linked to a land register entry. Exceptions are possible if the loan amount is less than USD 50,000 and the loan applied for is used for the renovation or remodeling of an existing property. Many banks use the product name modernization loan for such a loan without a land register entry. Borrowing for the purchase of a condominium, even if the purchase price for a small and simple apartment is less than 50,000 USD, is only possible at a few banks without having to enter the liability in the land register.

Advantages and disadvantages of the loan without entry in the land register

The waiver of an entry in the land register prevents the property from being encumbered and saves the fees to be paid to the land registry. These advantages are offset by the disadvantage that a loan used for renovation without an entry in the land register is fundamentally more expensive than a conventional real estate loan, since the registration of the land register does not offer a high level of credit security.

There is an exception to a home savings loan used for the renovation without an entry in the land register, as this is granted at the loan terms agreed in the home savings contract and many building and loan associations generally refrain from entering the land register for small loan amounts. For some modernization projects that are considered to be particularly worthy of support by the legislature, homeowners and apartment owners can take out cheap loans from Intrasavings bank, which are usually also not entered in the land register.

Compare loan offers

The loan interest payable for a loan without a land register entry differs significantly depending on the bank, so that a careful loan comparison is required. Almost all banks limit the duration of modernization loans without entry in the land register to a maximum of ten years. When comparing an offer for a loan without a land register entry, property owners pay attention not only to the effective annual interest rate but also to other agreements in the loan agreement.

The authorization to repay the modernization loan early is particularly useful for the borrower. Another sensible contractual agreement entitles the borrower to change the repayment agreement free of charge. If the flexibility offered is exercised, the nominal interest rate is decisive for the recalculation of the loan repayment and the interest, while the effective interest rate indicates the borrowing costs for scheduled repayment.

Use cheap loans from regional banks

Real estate owners can get a loan from many regional savings banks and local Cream banks without a land register entry at reduced interest if they hire a local craftsman to carry out the modernization work. Most regional banks grant the benefits regardless of the nature of the planned modernization measure, so that property owners receive an inexpensive loan even for measures that are not eligible for funding from Intrasavings bank. The reason for granting the cheap modernization loans is the statutory duty of regional savings banks and Cream banks to strengthen local companies.