Bullet loans & annuity loans combined - sensible?

Hello team,

we have received an offer from a small, local bank for the financing of our new build in 97421. Here are the details:

Total volume: €550,000
Loan needed: €350,000
The rest is equity (land already paid for - €86,000) as well as cash.
The new build is a self-occupied single-family house in KFW55 standard.

Our wish is to secure the low interest rates for as long as possible, have a special repayment of >=5%, and have a monthly burden of €1,400 in the normal case. Currently, we expect to be able to make special repayments (see amortizing loan below).

We were given a construct of 3 different contracts:
1. Bullet loan €100,000 based on KfW credit with 0.75% interest + Schwäbisch Hall building savings contract.
16 years and 7 months. Fixed effective annual interest rate for the entire construct: 1.18%

2. Bullet loan €150,000 based on Schwäbisch Hall building savings contract.
Term: 21 years and 3 months. Fixed effective annual interest rate for the entire construct: 0.97%

3. Amortizing loan €100,000 including 10% special repayment
Term: 9 years and 5 months. Fixed effective annual interest rate for the entire construct: 1.57%

The total costs for all three contracts and a maximum term of 21 years and 3 months amount to €35,003.77. After this period, the €350,000 will be repaid.
Provision interest is 12 months without additional interest on all three contracts.

My questions to you:
- The construct of 3 contracts with different terms and repayment amounts seems somewhat confusing to me. However, at first glance, all our wishes seem to be fulfilled, and after 10 years I can anyway redeem and reschedule any contract, right?
- Can someone find a comparable amortizing loan that offers similar conditions (total costs, interest security) with our figures - according to our repayment plan it should already have an interest rate of 0.95%, which has not yet been offered to us.
- Other assessments?

Many thanks!
Kili

- I have followed your posts in several forums and think you might also have one or two tips here or possibly even an offer up your sleeve?

The only thing that comes to mind is... maximum confusion or maximum commission. Are you sure the numbers are correct? A quick calculation should show that the monthly rate is well over €1400, or the terms don't match.

Just the logical check alone: Your components have 1.18%, 0.97%, and 1.57% and thanks to final maturity, no amortization effect. And yet it's supposed to beat an annuity loan with 0.95%? Something doesn't add up.

A 15-year loan should be available at under 1% with those numbers. That would roughly match your terms and rates as well.

The information is incomplete to validate whether the 350K€ is actually paid off and the total costs are correct. But if both are the case, it looks very attractive in my opinion.

Alternatives
1) Full repayment over 20 years at HVB at 1.0%, but the rate would then be 1600€.
2) Annuity loan 15 years at 0.9%, e.g. HVB or Degussa, with a 1400€ rate and about 130K€ remaining debt. That is manageable.

3. Annuity loan €100,000 including 10% special repayment Term: 9 years and 5 months. Fixed effective annual interest rate for the entire construct: 1.57%

Did you include the full special repayment each year in your calculations? How else do you come to an ambitious 9.x years?

All I can think of is... maximum confusion or maximum commission. Are you sure the numbers are correct? A quick calculation suggests the monthly installment should be well over €1400 or the terms don't match.

Just a logical check alone: Your components have 1.18%, 0.97%, and 1.57%, and thanks to bullet repayment no amortization effect. And yet this is supposed to beat an annuity loan with 0.95%? Something doesn't add up.

A 15-year loan should be obtainable at under 1% with those numbers. That would roughly fit your terms and installments as well.

Sorry – I forgot here that the annuity loan is actually paid off in 9 years and 5 months. That means we calculated with special repayments currently (at our request, as the financial situation allows it).

In the first 9 years and 5 months, the calculated monthly burden is:
€2002
In years 10-16: €1373
In years 17-21: €682

Over 255 months (total term), that averages a monthly burden of €1491.
But I also had the feeling of confusion and commission and am now looking for the catch.