Airea
2019-01-24 17:13:48
- #1
Hello,
we have offers for real estate financing and despite much calculating and weighing options, we are still uncertain about how to finance. I hope to get a few hints here about what we might not have considered yet or thought-provoking ideas that might steer our decision one way or the other.
My partner and I are both self-employed; her work (physio) is currently reduced because of our two kids (kindergarten age), I have been working as a freelance engineer for 10 years. Monthly net income in recent years has always been slightly over €5,000. She will contribute significantly again at the earliest in one year. Baukindergeld probably does not apply as in one of the applicable years we were just above the limit.
We want to buy a nearly new existing property in NRW for about €420,000 (including real estate transfer tax and notary, no broker fees, no investments needed in the next years according to the building surveyor). We can provide equity of about €110,000 to get below 80% loan-to-value. The required loan amount is therefore about €310,000. To get below 75% for the next cheaper interest rate level, we would have to invest our remaining financial buffer, which is possible but probably reckless.
We now have several offers from the financial intermediary that have been assessed as feasible by the providers considering our conditions. Based on our circumstances, we calculate that a monthly rate of about €1,500 is currently easily manageable. It will be easier in the future when the second income returns and childcare costs disappear.
The supposedly cheapest offers always come from DSL Bank. Once as a 20-year full annuity loan with 1.78% and a rate of €1,526. However, without special repayment options. Total interest payment then just over €59,000.
The next best offer for a 20-year fixed interest rate as a non-full annuity loan with special prepayment option and repayment change option is already over 2%, making it rather uninteresting.
For 15 years fixed interest rate, DSL Bank offers 1.73% at a €1,480 rate, or 1.72% at €1,348. Rate changes up to 3 times free of charge, but only upwards, not downwards. Special repayment up to 5% annually.
Then there is also Ing-Diba with 1.75% at a rate around €1,500. Repayment changes 2 times free between 1% and 10% possible. Special repayment up to 5% annually.
Offers from Volksbank and Sparkasse are well above 2%, so it will probably come down to one of the direct banks via the intermediary.
Ing-Diba is actually too expensive for 15 years fixed in comparison to the 20-year full annuity loan from DSL Bank. On the other hand, one often reads much negative about DSL Bank, mostly in connection with construction financing where the loan is paid out gradually.
Nevertheless, my gut feeling is more with Ing-Diba. You never know what will come, and if things get worse, the repayment change downwards would be possible in an emergency, and if things go better, there is the special prepayment option to reduce interest burden. Without special prepayment and with constant repayment, the remaining debt after 15 years would be about €97,000, with the same rate as the full annuity loan even somewhat less. In about three years we will still get a building savings contract with about €20,000 savings balance then, retrospectively better interest, which could still be used for special repayment. If we can use further special repayments, the remaining debt could be pushed down even further. Then, for example, €50,000 in the follow-up financing after 15 years would not break our neck even with increased rates. Could only be more expensive than the full annuity loan in the worst case at the end.
What do you think: Better the supposedly safe full annuity loan but without the option to reduce the rate in bad times, investing available capital in good times instead? Or bet that we can repay properly over the next 15 years and maybe even get a better deal?
we have offers for real estate financing and despite much calculating and weighing options, we are still uncertain about how to finance. I hope to get a few hints here about what we might not have considered yet or thought-provoking ideas that might steer our decision one way or the other.
My partner and I are both self-employed; her work (physio) is currently reduced because of our two kids (kindergarten age), I have been working as a freelance engineer for 10 years. Monthly net income in recent years has always been slightly over €5,000. She will contribute significantly again at the earliest in one year. Baukindergeld probably does not apply as in one of the applicable years we were just above the limit.
We want to buy a nearly new existing property in NRW for about €420,000 (including real estate transfer tax and notary, no broker fees, no investments needed in the next years according to the building surveyor). We can provide equity of about €110,000 to get below 80% loan-to-value. The required loan amount is therefore about €310,000. To get below 75% for the next cheaper interest rate level, we would have to invest our remaining financial buffer, which is possible but probably reckless.
We now have several offers from the financial intermediary that have been assessed as feasible by the providers considering our conditions. Based on our circumstances, we calculate that a monthly rate of about €1,500 is currently easily manageable. It will be easier in the future when the second income returns and childcare costs disappear.
The supposedly cheapest offers always come from DSL Bank. Once as a 20-year full annuity loan with 1.78% and a rate of €1,526. However, without special repayment options. Total interest payment then just over €59,000.
The next best offer for a 20-year fixed interest rate as a non-full annuity loan with special prepayment option and repayment change option is already over 2%, making it rather uninteresting.
For 15 years fixed interest rate, DSL Bank offers 1.73% at a €1,480 rate, or 1.72% at €1,348. Rate changes up to 3 times free of charge, but only upwards, not downwards. Special repayment up to 5% annually.
Then there is also Ing-Diba with 1.75% at a rate around €1,500. Repayment changes 2 times free between 1% and 10% possible. Special repayment up to 5% annually.
Offers from Volksbank and Sparkasse are well above 2%, so it will probably come down to one of the direct banks via the intermediary.
Ing-Diba is actually too expensive for 15 years fixed in comparison to the 20-year full annuity loan from DSL Bank. On the other hand, one often reads much negative about DSL Bank, mostly in connection with construction financing where the loan is paid out gradually.
Nevertheless, my gut feeling is more with Ing-Diba. You never know what will come, and if things get worse, the repayment change downwards would be possible in an emergency, and if things go better, there is the special prepayment option to reduce interest burden. Without special prepayment and with constant repayment, the remaining debt after 15 years would be about €97,000, with the same rate as the full annuity loan even somewhat less. In about three years we will still get a building savings contract with about €20,000 savings balance then, retrospectively better interest, which could still be used for special repayment. If we can use further special repayments, the remaining debt could be pushed down even further. Then, for example, €50,000 in the follow-up financing after 15 years would not break our neck even with increased rates. Could only be more expensive than the full annuity loan in the worst case at the end.
What do you think: Better the supposedly safe full annuity loan but without the option to reduce the rate in bad times, investing available capital in good times instead? Or bet that we can repay properly over the next 15 years and maybe even get a better deal?