Cancel the loan and accept a better offer?

Hello,

I am new here and have been reading along for a long time. Now I also have a question :)

We have the following situation:

-> Loan taken out for 20 years at 1.89% eff., monthly rate (including KFW = approx. €2200)
The rate seems high to us, but manageable with our salaries (approx. €6500 total income, both equally high salaries, not married, no children yet)
3.5% repayment (freely changeable repayment rate anytime free of charge from 3.5-5.5%) + 5% special repayment per year.

Without special repayment, there would still be approx. €90,000 outstanding after 20 years. Calculated term approx. 23 years.

Now, unfortunately, interest rates have fallen significantly since closing and we obtained a 30-year condition from Interhyp:

30 years fixed, 2.43% effective, 2.24% repayment (changeable twice during the term, but not below 2.24%), monthly rate including Kfw = approx. €1950 - no outstanding debt after 30 years, 5% special repayment option per year.

What we like about the offer: long interest rate security, approx. €250-300 more available monthly and security regarding the outstanding debt. What is of course less great are the costs of the loan: the loan costs (expenditures for interest increase by €80,000) if we would use the full 30 years. The plan is, however, to be finished after 25 years at the latest.

So you could say you can put aside the monthly "savings" and at the end of the year either go on holiday or buy something else or put it into the special repayment.

Now the only question is whether all the effort (revoking the loan, transferring the land charge -> costs are even borne by Interhyp!) is worth it.

With the lower rate we would just feel more comfortable... without KFW the rate would then be €1790 versus €2050 with the other loan. Sure, not the world, but if things get tight and you only have one salary, you would have €260 more available. And we have security regarding the interest and would not have to refinance €90,000 after 20 years.

I don’t know... maybe we’re driving ourselves crazy... I wonder if others feel the same way...
We just want to be able to live and not carry every euro to the bank every month.

What do you think? What would you do?!?!

You are actually contradicting yourselves with the new loan. On one hand, you want to be finished after 25 years, on the other hand, you are paying interest for a 30-year fixed interest period. The extra repayments also have to be saved up somehow, so in the end you actually have a higher burden than 1950€. With the first loan, the interest rate is better and the remaining debt of 90,000€ is manageable for you. The interest rate can almost go through the roof. Personally, I actually find the first offer more reasonable. The only thing, in my opinion, would be if you couldn't afford the rate in the long run. But you have actually already trusted yourselves with that once. Is there now fear of your own courage?

Also don't see any advantage in the new financing. Would be happy about the 1.89% over 20 years.

Why do you want interest rate security for the remaining TEUR 90? That is just a drop in the bucket given the income and original loan. Inflation is not even taken into account here, so the debt will be worth even less in 20 years...

Why did you choose such a high repayment rate in option 1 and not the possibility to adjust it downwards if it now seems too high to you?

Thank you for the answers. Well, the credit institution requires a minimum repayment of 3.5% for a 20-year term - that's why we couldn't reduce it. For me, €90k always seems like a very large remaining debt... if the interest rate suddenly rises to 6%, then the installment will skyrocket... or the remaining term will be extended significantly. That's why the consideration was

Thanks for the answers. Well, the credit institution requires a minimum repayment of 3.5% for a term of 20 years – that’s why we couldn’t reduce it. To me, €90k always seems like a lot of remaining debt... if the interest suddenly goes up to 6%, then the installment really shoots up... or the remaining term extends significantly. That’s why the consideration was

in 20 years you will probably earn €8k. You took out about €480k if I have calculated it correctly. That means you repay a solid €390k! So €90k seems little to me. Saving money and making special repayments is always a marketing gimmick. You alienate it anyway. Also, revoking the loan will not be without costs. Even at 1.89%, the bank is justified in demanding a prepayment penalty. Excluding KfW, that can already mean a few thousand euros.