Buy a second property - on existing mortgage

Well, sometimes it can be that simple.

I just called the bank and asked. Good news, our house value has increased again, now at 266,000 with safety deductions. Since there are only 167,000 debts on it but a mortgage of 210,000, they would give us a blank 50,000.

At exactly 50,000, I then have an interest rate of 1.11% for 5 years and a payment of 255 euros. Remaining debt after 5 years with 5% repayment and maximum special repayments (5%) would be 24k euros.
With 10% repayment, the rate is 463 euros per month and the remaining debt after 5 years 11k, also again with the maximum special repayments.
I don’t think any installment loan can top that.
And crazy, a whole apartment paid off after 6 years.

I do add a bit on top of the rent to get to the 463 euro rate, but it’s a pretty good investment.

If I stay under 50,000, the interest rate goes up by 0.5%. But I can simply add the incidental purchase costs and a new kitchen or I might just go on vacation... I specifically asked, there is no proof of use, it doesn’t matter at all what we do with the money. I also don’t need a mortgage, meaning the new property would be debt-free right away.
It would actually be a second separate building financing, but the contract doesn’t mention the apartment, meaning the tax office could actually cause problems, so I’d have to ask beforehand. This is called "capital procurement on existing property."

Mom has already inquired about a few apartments. She’s as happy as a clam

If I do take the 5% repayment option, I can even get a regular follow-up financing for the remaining debt, but according to the bank, that’s only for existing customers.

By the way, it only works this way because for a new building financing with a mortgage on the new apartment I would exceed the 200 km limit within which a non-owner-occupied property must be located.

She’s already sent me the offer, I could have the payout now, but without a concrete apartment I’d rather not, since finding something within the 14-day withdrawal period is too stressful for me.
Well, my husband would then buy himself a Tesla, but I think we better leave that.

It would actually be a second separate construction financing, but there is nothing about the apartment in the contract, i.e. the tax office could actually cause problems, so I would have to ask beforehand.

Just ask the bank very simply whether the purpose of use can not simply be changed. It should be no problem and then the tax office will be your friend...

Why does everyone here want to flirt with the tax office? If no land charge is taken out on the property to be purchased, why does the tax office have to know about the whole thing at all? Mom is then living there for free (so only paying incidental costs); if she then hands you, for example, three hundred euros a month for shopping errands, the tax office has nothing to do with that. This is perfectly legal, you can let someone live somewhere rent-free; parents sometimes do this with their studying children. But then you can hardly deduct the entire purchase process. So nothing would be depreciated/deducted and no "rental income" would be taxed. This definitely saves about 500 euros a year (if not even up to 1,000 euros), which should pay off in the long run. Unless there is murder and mayhem in the family, then of course a proper rental contract is needed and everything is nicely presented to the tax office. If you do it officially with rent, depreciation and everything, then from a profitability perspective, the repayment should be chosen as low as possible (and definitely no special repayments); otherwise the interest deductibility ends much too quickly and then higher taxes would have to be paid accordingly, which would make the whole thing less profitable again. And above all, a lot of equity is tied up. Better to stretch the term a bit and lower the repayment. With the money saved this way, you can then, for example, buy a third property, etc. (or it is used for an electric car; but then – as you have correctly written – no Tesla, very questionable whether this company will even exist in 5 years and if replacement parts will be available, if Musk continues to produce such nonsense; they already have to pay over 8% for plain vanilla financings ..., which is roughly like an unemployed person taking out 200% financing)

PS: I am well aware that you do what makes you feel comfortable.

Why does everyone want to flirt with the tax office here? If no land charge is taken on the property to be purchased, why does the tax office have to know anything about the whole transaction at all? The mom just lives there for free (so only pays incidental costs); if she then hands you, for example, 300 euros a month for shopping errands, that’s none of the tax office’s business. That is perfectly legal; you can let someone live somewhere rent-free; parents sometimes do this with their children who are studying. But then you can hardly deduct the entire purchase transaction. So nothing would be depreciated/deducted and no "rental income" taxed. This definitely saves about 500 euros a year (if not even up to 1,000 euros), which should pay off in the long run. Unless there is murder and mayhem in the family, then of course a proper rental agreement must be made and everything presented neatly to the tax office. If you do it officially with rent, depreciation, and everything, then from a yield perspective the repayment should be kept as low as possible (and especially no special repayments); otherwise the deductibility of interest runs out too quickly and higher taxes would have to be paid accordingly, which makes the whole thing less profitable again. And above all, a lot of equity is then tied up. Better to stretch the term a bit and lower the repayment. With the money saved this way, you can then buy, for example, a third property, etc. (or it is used for an electric car; but then—as you have already written completely correctly—no Tesla, very questionable whether this place will even exist in 5 years and whether you will get replacement parts if Musk continues to mess things up like this; they already have to pay over 8% for plain vanilla financing..., that’s roughly like an unemployed person taking out 200% financing)

PS: I realize you do what you feel comfortable with.

It’s called tax evasion

Why does everyone want to flirt with the tax office here? If no land charge is taken out on the property to be acquired, why does the tax office have to find out about the whole thing at all? Mom then lives there for free (so she only pays ancillary costs); if she occasionally gives you three hundred euros a month, e.g., for shopping errands, that’s none of the tax office's business.

Because the tax office will find out on its own that you are buying an apartment. Then, at the latest with the next tax return, the question arises what is being done with the apartment and that it MUST be declared in the tax return. If mom lives rent-free, there is no intent to generate profit and the tax office adds a fictitious market rent as income on which you have to pay tax.

I thought you have rented properties and are familiar with the matter?

If I stay below 50,000, the interest rate increases by 0.5%. But I can simply add the incidental purchase costs and a new kitchen, or I could just go on vacation... I specifically asked, there is no proof of use,

Or directly repay it to the bank as special repayments.