Building a house financially feasible or a pipe dream?

But that also costs money right away, without me knowing that he can get me something useful, right?

The costs are nothing to you. A financial broker is usually paid a commission by the lending bank. The higher the loan or [Bausparer], the more commission. They first promise you that everything is no problem, even 600k€ is no problem for them.

Jokes aside, if you approach the matter with common sense and don’t let the financial broker fool you, it is a very good option. You just need one who knows what he's doing and isn’t primarily after the commission.

I would swap the apartments. You do say it’s not possible, it’s taboo, but there is surely a solution. Stairlift or something similar. Maybe also barrier-free renovation with a subsidy from the kfW? That can certainly be realized more cheaply than a new build, maybe even cheaper than the extension. Perhaps you could also add a balcony, then your father can smoke too. They surely want you to be well, after all.

So, after I had the first appointment at a bank on Saturday, I can now present some initial solid numbers.

The topic of discussion was the extension as originally planned, with costs of €150,000 while simultaneously refinancing the existing loans amounting to (still) €170,000.

Option 1: Repay the €170,000 and extension for €150,000 = New loan of €320,000. Result: 30 years term, 2.10% fixed for 20 years, €1,200 monthly payment. 5% special repayment possible per year. The only thing I would have to cover myself is the arising VFE, which would be manageable. The remaining debt after 20 years would be about €130,000 for this model, which I could possibly secure with a building savings contract, but don’t have to. The model calculated refinancing at 3.75% after 20 years and would be paid off after 30 years at the same rate.

Option 2: €150,000 for the extension immediately and two forward loans staggered according to the remaining terms for the existing loans. We couldn’t put precise conditions on paper due to the late hour of the meeting, but the advisor said we would probably end up around 2.3% on average – then I wouldn’t incur any VFE – so basically about the same costs as Option 1, only the monthly burden today would be significantly higher and would stepwise decrease in 2 and 6 years respectively.

Both options sound great to me at first. I did not expect such a "good" interest rate, nor such a "good" monthly payment. All in all, I would only pay a little more than €100 monthly more than before, of course for a much longer period than before, but could realize my extension as originally planned.

Surprisingly, the bottleneck in my plan is not the monthly burden, but the securing of the loan.

Unfortunately, the advisor could not open his valuation program due to technical problems and had to rely on my information regarding the value of the house. I gave him the numbers I know:

The house bank valued the property at €249,000 in 2011. In 2015 I had the house informally valued by an expert at Sprengnetter, resulting in €285,000 (before extension). The advisor then based his calculations on this.

He arrives at the 2.1% as follows:

€280,000 (value of the house) + €130,000 (value increase from the extension) = €410,000 new value after extension.

€410,000 * 90% = €369,000 market value
€369,000 * 60% = €221,400 lending value under 60% => best interest rate 1.49%
€369,000 * 20% = €73,800 lending value 60% to 80% => interest surcharge of 0.5%, thus 1.99%
€320,000 (loan amount) - €295,200 (secured by house) = €24,800 unsecured portion => 3.99%

For these amounts, however, in order to get financing I would need to commission an appraiser to value the property, costing me €600. The appraisal would have to come close to €280,000 value for this model to be feasible.

Exactly how I would then finance this would have to be clarified. Whether via Option 1 or 2, or other routes (one could also consider a TA loan with a building savings contract, to secure the interest rates sustainably, or similar).

Opinions?