Building savings contracts one-time interest rate changes, where is the catch?

Thank you for the explanation, I’m curious to see what he calculates.

I’ll take a look over the next few days at the pros and cons. Until I understand it all again..

He also said the interest rate can be from 1.0-1.6%, he has to calculate it.

A few years ago, we were also offered to change our home savings contract with improved loan interest rates. I believe we would have had to repay the credit interest in return, which corresponded to 500-700 euros. At least that's how I remember it.

Purely in terms of the interest rate, I find it quite plausible. The BSH currently also has 1.55 in the building loan. We are also currently considering taking out something like that to secure our remaining debt.

From the interest rate alone, I find it quite plausible. BSH currently still has 1.55 in the building loan. We are also currently considering concluding something like this to secure our outstanding debt.

In the current interest rate situation, it probably makes sense.

You should just consider what to do: lower interest rate at the building society (0.xx-1.50% range) = usually you have to save 50% of the building savings amount (where you hardly get any interest) for that you get the other part at the low interest rate On the other hand: it must then be repaid quickly (6-7 years)

An alternative would be the building savers that lie at +/-2%, because there you usually only have to save 30-40% (sometimes only 20-25% with a surplus allocation option) and usually then you have more time to repay it (10-16 years)

From the interest rate alone, I find it quite plausible. BSH currently also has 1.55 in the building savings loan. We are also currently considering taking something like that out to secure our remaining debt.

It is generally not worth it because of the upfront fees and the necessity to make significant payments during the saving phase. You get 0.1-0.25% interest on your building savings balance, but you pay 2.5% (?) on your loan. This is a negative interest differential transaction over a very long period, and even the cheap building savings loan does not make up for that after 20 years. The money is almost always better invested in a special repayment, which also reduces the remaining debt accordingly.

Whether it is worth it or not should be calculated.

Sure, if I can count on higher repayment from the beginning, then I should do that and make sure that after the fixed interest period my remaining debt is at 100k or below, then it doesn't matter whether the interest rate is 2% or 6%.

But if I took out 500k and only have a 10-year fixed interest period, and after 10 years still have 400k outstanding, what makes more sense then?
Make a 100k special repayment? and have interest risk on 300k?

Or should I invest the 100k in a [Bausparer], and cover the 400k as well as possible? And if I then pay 2% at the [Bausparkasse] instead of 4% at the bank, it has more than paid off.

Simple calculation:
The 100k special repayment at 2.5% interest saves about €12,500 in interest over 10 years (if I make 10k special repayments every year!)

300k with 2% interest savings over 10 years brings €30,000 interest savings, then we subtract the closing costs of €4,000, still leaving €24,000, so double.

PS. In the example calculation, you pay a monthly rate of €1,875 (500k with 2% repayment and 2.5% interest) plus the special repayment of 10k per year, so an effective monthly burden of €2,700.
You would then also have that at the [Bausparkasse] in years 11-20....

Of course, if the interest rises to 3% after 10 years, the [Bauspar] option would be marginally more expensive than bank financing (because of closing costs), but what if the interest rises to 5%? Then the savings would be much higher.

With the closing costs you buy security... like life insurance.

And if you don't need insurance, then that's fine.

PS2. Some on the forum predict a crash in real estate prices + rising interest rates.
Then everyone can ask themselves the question:
If the interest rate in 10 years is 6%, and the market is overwhelmed by "sales" because many can no longer afford their house, would I want such "protection" or not?

I also secured my first house with a [Bausparer] (alongside the financing). Did I need it? No, I then dissolved it.
Do I need it with my current financing? Also no, because I have a very high repayment rate, and if I make special repayments a few times, I am basically done after the fixed interest period, and if I skip special repayments sometimes, the remaining debt becomes so low that it doesn't matter. So I can do without protection here.