Funds for New Houses: Get Upto €150,000
The German government is providing funds for new houses. As long it meets certain climate standards, interested people can claim this fund.
The Climate-friendly New Building subsidy is an initiative by the state-owned KfW bank. The scheme is one of the top government plans. Starting this March, individuals, companies, and other investors can apply for this fund.
The maximum amount is up to €150,000 per residential unit. What’s more is that this scheme is not exclusive to families. Single people & companies wanting to build a home or invest in one can also apply. This amount is only eligible for homes with EH 40 energy efficiency rating.
If the Green Residential Level is reached, people can get up to €100,000 per residential unit.
It is important to understand right off the bat that the money is not free. What the funding program provides is a reduction in interest rates. The federal government has said that, according to the standard market condition, people can get up to a 4% of interest rate reduction.
As currently, the standard market condition has been increasing due to inflation, this kind of program will aid a sustainable future. People who are in need of this fund for the construction of energy-efficient households can apply now. The application portal at the kfw bank has been up since 1 March.
Who can apply?
The following people looking to build a sustainable home can apply for this scheme.
- Private individuals
- Condominium Communities
- Municipal Companies
- Landlords
- Private Companies such as Housing Cooperatives
- Public Corporations & Institutions
- Social Organizations & Associations
Not all schemes are for everyone. People with existing loans, construction projects that are already underway and in need of additional funds, and people who are buying a new plot of land should not apply. The KfW website specifies this explicitly.
Types of Loans
There are two types of financing under this scheme- Bullet Loans and Annuity Loans. With bullet loans, you simply have to repay the interest over the course of the loan’s duration, then the entire principal amount all at once. With an annuity loan, you only pay interest during the initial years, the repayment-free start-up period. After that, you must make monthly payments of equal amounts.
The 4-10 year duration of the annuity loan with a redemption-free period of 1-2 years has the lowest interest rate. It has an effective annual interest rate of 0.01%. The highest interest rate is of the bullet loan at 1.01%.
Steps to Apply for the Application
- Hire energy efficiency and sustainability experts to determine if your house meets the requirements. The expert will prepare the ‘Confirmation of the Application’ document or the BzA.
- Find financing partners & apply for credit.
- As soon as you receive approval from KfW, your loan agreement is concluded. The construction can now begin, or the property can be bought.
- Once the construction is finished, submit the Confirmation After Implementation (BnD) to your financing partner. The BnD can be issued by the energy expert & must be submitted at the earliest.
The loan can be called off completely or partially 1 year after the approval. It is also possible to get an extension of up to 2 years. A 0.15% commission is charged from the 13th month of the loan. It is payable monthly on the credit amount.
Early repayment of the full amount will cost a prepayment penalty fee as well. Quite important to note is that partial refunds are not available. Head to the KfW website to apply to get funds for new houses now.
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