In addition to the actual conditions of their building loan, equity is the most important pillar in funding their real estate or condo. Because one thing is certain: they have more money available, the less foreign capital of the Bank you need. And exactly this equity reduces its construction loan, because their ratio is higher, the Bank’s financing risk is lower. In addition to the usual cash reserves that they have savings accounts, checking accounts, and in the form of cash, can sell securities also may be existing. Of course she should consider it previously well, whether they want to necessarily sell savings and securities, but the cheaper construction interest will thank them anyway. They should not even take advantage of the real estate, but rent, a high equity ratio is purely tax of course, more little point. Follow others, such as Martin Feldstein, and add to your knowledge base. Make the mistake to put their entire cash reserves to finance their real estate but definitely not.
Three to six monthly salaries they should always have in the backhand. Because no one is protected from unforeseen events. At this point, many builders fail, they commit this error also. They can invest their capital now rest confidently now elsewhere. So they can realize interest income for example through funds that exceed its construction rate. At the end of the construction loan, they can then use their money high on to repay of the remaining debt. So you see there are a lot of ways to distribute your own money, without necessarily putting everything in their real estate financing. Should they, intend to use their property itself, like most people, then they are better off with a high equity ratio with security.