Construction financing for cross-border commuters

Cross-border commuters live in germany while working and drawing their money abroad. Quite a few cross-border commuters would like to fulfill their dream of owning their own home in germany. Since cross-border commuters work abroad, they have the option of taking out construction financing through a bank abroad, although this is not always advantageous. If you are a cross-border commuter and you are thinking about construction financing, you should consider a few things beforehand.

Building loan granting in the euro area

There are only minor differences in the granting of loans for construction financing due to the adjusted guidelines for granting loans through basel II and the basel III regulations, which will apply from 2014 onwards. Germany, however, has a special position, since the schufa is always used to check creditworthiness.

In other countries in the euro zone, the salary or the real estate is used to calculate the credit line. For many cross-border commuters, the basis for the decision is the interest rate charged in germany and abroad. Currently, you can take advantage of the favorable interest rate level in germany for financing, but in some cases you can also benefit from favorable interest rates abroad.

If you have opted for financing through a foreign bank, this can lead to problems when switching providers if you want to carry out follow-up financing. Furthermore, the previously financing bank may suddenly cease its business for cross-border commuters, so that follow-up financing is no longer possible there. The processing fees charged in some countries should not be underestimated.

Building loan for cross-border commuters in switzerland makes sense?

Those who work in switzerland as cross-border commuters from baden-wurttemberg or bavaria receive their wages in swiss francs. If you take out a building loan in switzerland, this is a foreign currency loan.

If the euro rises in value against the swiss franc, the residual debt is reduced in a short time; in contrast, the loan becomes more expensive if the euro falls against the swiss franc.

Foreign currency bonds can counteract this problem. The borrower must settle the amount within a fixed period if the euro exchange rate falls.

If a land register entry is made in swiss francs, it is possible to avoid this problem; security via foreign currency bonds is then not required. Many swiss banks allow financing up to 80 percent of the market value. However, the cross-border loan is usually limited in its radius, so the building must be located within a distance of up to 30 kilometers from the border.

Lending in denmark and poland

Denmark is stricter about lending to border crossers, with interest rates comparable to those in germany. A cross-border loan in poland is unusual, because so far only few germans work there. If you are interested in a loan from a polish bank, you should find out about the possibilities and regulations.