Assessment of financing offer / subordinated loan / repayment

Hello everyone,

brief introduction: Fortunately, the second half of my parents' semi-detached house is for sale, quite an old construction year (between 1910-1930), but has been relatively well maintained throughout. We can have the house for €185,000, and we roughly plan to budget another €55,000 for a new attic conversion including renovation costs, of which €10,000 through own labor does not need to be included. Unfortunately, there is really no equity available, as it had to be lent out due to a family emergency 2-3 years ago. But that does not matter here, we really want to have the house.

Currently, we pay €840 rent including utilities, we have calculated around €1,000 monthly loan repayment. From Interhyp we have received the following offer from DSL Bank:

Purchase price of the property €185,000.00
Costs for conversion and modernization + €55,000.00
Costs for notary and land registry + €3,700.00
Real estate transfer tax + €12,025.00
Own labor - €10,000
Total financing requirement: €245,700.00

Option 1:
15 years fixed interest period, installment €1,054:
DSL Bank €165,700.00 Term: 15 years Nominal interest rate: 1.68 % Effective annual interest rate: 1.71 %
DSL subordinated loan €30,000.00 Term: 120 months Nominal interest rate: 6.78 % Effective annual interest rate: 6.99 %
KFW Home Ownership Program: 124 €50,000.00 Term: 10 years Nominal interest rate: 1.25 % Effective annual interest rate: 1.29 %

Option 2:
20 years fixed interest period, installment €1,084:
DSL Bank €165,700.00 Term: 15 years Nominal interest rate: 1.9 % Effective annual interest rate: 1.93 %
DSL subordinated loan €30,000.00 Term: 120 months Nominal interest rate: 6.78 % Effective annual interest rate: 6.99 %
KfW Home Ownership Program: 124 €50,000.00 Term: 10 years Nominal interest rate: 1.25 % Effective annual interest rate: 1.29 %

First the general question: What do you think of the offer? Are there possibly other options (building savings contract or similar) that would be more suitable for our situation? My wife has a huge contract with currently €10,000 paid in. Our financing advisor said that for tax reasons it would hardly / not at all be worthwhile to convert this contract into Wohnriester.

On Tuesday we have an appointment to discuss the financing offer. I am also interested, among other things, in whether and what subsidies there are, since we have 2 children. Maybe Wohnriester would be more worthwhile here? I don't have one, would it be worth signing up?


Many thanks in advance!

The offer belongs in the shredder. Sorry if I put it that way.

Get an alternative offer from another bank. The thing with the 30K EUR just doesn't work.

Hm, ok. Could you maybe explain your assessment a bit? What would a more sensible option look like in your opinion? I would actually like to bring that up, I just can’t really tell the advisor "this belongs in the shredder".

Maybe a little explanation about the €30,000: Actually, €15,000 of subordinated loans were planned to cover incidental purchase costs (which is supposedly the case with (almost) every bank). However, with DSL-Bank, it is worth considering increasing the subordinated loan to reduce the loan-to-value ratio, because DSL-Bank charges significantly less interest at a (I believe) 85% loan-to-value ratio. From what I recall, the difference was about 0.7% or so. According to the advisor, it would be worthwhile, but I would also get an offer with only €15,000 subordinated loan upon request.

The conditions in variant 1 for the 15Y block are really not bad, considering that it is actually a >100% financing. However, the "Nachrangdarlehen" is more in the area of a consumer loan and with the 30k not exactly small, possibly too large. Whether it is worth it would have to be compared. The "Nachrangdarlehen" must definitely be repaid quickly and after 10 years you need to come up with something for the remaining amount of the KfW component (or refinance there - which is also possible).

Hm, ok. Could you maybe explain your assessment a bit? What would a more sensible option look like in your opinion? Because I would then address that too, I can hardly just tell the consultant "that belongs in the shredder" .

Have you dealt with the topic of financing? Sorry, building/buying a house involves more than just hiring craftsmen or doing the work yourself.

In my opinion, financing is one of the most important building blocks. Everything stands or falls with it, and it will accompany you for almost half your life.

I can't understand how some people approach this so naively. Guys, you can't just shrug this off or do it quickly on the side!

Yes, I have dealt with it or am currently dealing with it. And informing yourself also includes asking in the forum. I have explained the issue with the high subordinated loan and can hardly relate to "that's for the shredder." In my impression, a subordinated loan to cover the incidental purchase costs is not uncommon. The fact that the loan is so high is due to the mentioned special case of the DSL Bank.

I am aware that as a questioner you cannot expect anything if you ask in the direction of "want to buy a house, where to get money from?" but my question was already more detailed and I therefore hope for a more detailed answer. At least a justification.