Assessment of financing project and budget accounting

According to our advisor, the KfW loan is treated as equity capital by this bank.

Only for the bank’s conditioning (which is reflected in the commission that KfW pays to the bank). Otherwise, it remains a loan in the risk assessment.

After 10 years, KfW offers a new deal. You can accept it or redeem the remaining amount with a new loan from another bank. After 10 years, you are flexible there.

You can accept it, but you shouldn’t, because the conditions are not really market-appropriate. Redemption through another bank can (and often will) be a real problem. Why? A simple example with fictitious numbers that are easy to calculate: Loan-to-value of the house €440K ==> the bank can calculate €264K as reliable collateral, no more is allowed Financing €300K bank with 1.5% repayment and 20 years fixed interest = remaining debt approx. €255K after 10 years Financing €100K KfW with 3% repayment and 10 years fixed interest = remaining debt approx. €65K after 10 years A third bank, which is supposed to replace the KfW loan, only has €9K collateral for a loan of €65K at this point. No bank simply agrees to that – if you even find one, it will hit you hard financially. The previous bank has it easier because it continues growing into the collateral.

Probably a gas heating system with condensing technology. Possibly combined with solar. However, I am not very familiar with the topic yet.

Then you can continue to use the current heating system. Either properly with a heat pump or you can save the money for the heating replacement with a heat pump that will be necessary in 10 years anyway. Forget about the solar. Either photovoltaics for electricity generation or save the money.

The previous bank has an easier time with this since it keeps growing further into the collateral.

Thank you for the information. We will include the KfW component.

Currently, we have received a new offer with the following conditions:

We have received an offer for 354,000 €, which consists of two components:

1. Bank loan of 254,000 € at 4.19 % fixed interest for 30 years with 1.12 % repayment rate: 1123 € (37 years term)
2. KFW 124 of 100,000 € at 3.57 % fixed interest for 10 years with 1.51 % repayment rate: 423 € (35 years term)

Total rate: 1546 € (which means an additional burden of 9 euros and a longer theoretical term of 2 years, but 10 years longer fixed interest on the first component).

For comparison, there is an offer for the entire amount without KfW over a 20-year term:

1. Bank loan of 355,000 € at 4.28 % fixed interest for 20 years with 1.00 % repayment rate: 1562 € (39 years term)

and a longer theoretical duration of 2 years,

And even lower repayment ... I wouldn't undertake financing under 2%. It's frustrating to look at the bank statement every year, where nothing positive changes for the first 18 years.