Building savings contract or annuity loan - final decision!

No one here will be able to tell you that. Most bankers here probably are not active in the building society business, and most homeowners have just built and probably haven't experienced that yet.

I have a negative example of such a construct in my close family. A rented residential and commercial property was affected by flooding in 2002. All tenants moved out at that time. Although the installments were more or less continued to be paid from the pension, as far as I have insight, the building savings installment was reduced. This of course leads to an endless payment without allocation, without the interest ever going down. A refinancing was probably impossible at that time due to age (>80) and the lost income.
Even though this is not a representative example, it has somehow shaped my negative view of TA loans.
It annoys me when I see that my instant access savings lie almost unremunerated while on the other hand, interest accrues heavily every month on the loan. That would be even worse with a building society contract.


Regarding your case
What sum are we talking about? Is it the under 200K€ from the other thread?
In the worst case, you have a bridge financing of a few months with maybe 500€ additional burden.
Even if salary increases are not taken into account in a financing, a certain inflation (of costs and also salaries) is generally present, while the installment remains a constant block in the long term.
Accordingly, certain leeway should arise in the long run.

So if your financing is not tight and you have saved something every month, a few months or even 1-2 years should be bridgeable.
That is certainly not nice and of course spoils the comparison with an annuity loan, but it should not be an apocalypse. If it is, then you made a mistake, because then any other loss of income (unemployment, child, etc.) would also lead to a sale or forced auction.

I would rather be interested in the conditions of the two offers. Also the question why you did not ask Interhyp for another offer if you have concerns about DSL Bank.

It concerns €135,000.

Thank you for the example, but if I had to reduce my loan installment on an annuity loan, I would have the same problems with additional costs there.

Sure, I also understand your thoughts about the overnight money, but in the end, what matters is with which offer I pay less overall.

Concerns about DSL Bank have been dispelled; I discussed this extensively with the Interhyp advisor, who is my contact person and who initiates everything.

Financing is not fully utilized yet.

The fact is that I save a total of €400 on costs with the building savings offer.

Thanks for the example, but if I had to lower my installment on an annuity loan, I would have just as much trouble with additional costs there.

That is not quite correct. You have already made repayments and thus have a lower remaining debt. With the building savings contract, you extend the "uneconomical" saving period of the building saver, during which you receive little interest on your savings but pay loan interest on the full amount.

Furthermore, one should consider to what extent one actually counts on special repayments. With an annuity loan, these directly reduce the interest and thus the term. If these are paid into the building saver in the building savings variant, the interest on savings increases, the building saver becomes eligible for allocation sooner, but the bridging loan probably does not become due earlier. If the special repayment in the building savings variant is instead paid into the bridging loan, the building savings amount is actually too high and you actually save more with the building saver than you would need after the minimum savings amount.

We deliberately set our installment quite low at 2% initial repayment. We do everything else through the 5% special repayment option. The very first special repayment of €7,500 alone saves us €217 in interest per year plus compound interest. In 10 years this results in an interest saving of almost €2,500 and in the fixed interest period of 15 years already €4,000. (i.e., more than 50% of the special repayment paid in). This effect would not have come close to being as significant with a building savings contract.

Okay, you are right about the additional costs, but that is out of the question since we will always pay and be able to pay the monthly installment of about €850.

We don't really expect any special repayments; unless we hit the lottery and money flies into the house or apartment, especially in the first few years, it will only be minimal.

It is also clear to us that if we ever make special repayments, this money will go towards the loan, not into the building savings contract, since the goal is to save interest, not to reduce the installment.