Combination of Bank & KFW Loan for Home Purchase and Renovation

Alternatively, you could also finance the purchase variably without KfW124 and then, as soon as the renovation is due, finance everything together at Bank C with Bank loan C and 261. You just have to calculate it for yourselves. Welcome to the hard life of property owners / builders.

I admit that there is also some frustration in my post. Honestly, variable financing is too risky for me at the moment. Of course, there is always the risk of an interest rate increase, but the current volatility is really extraordinary.

For example, us. Bought an existing house 9 years ago, now starting the renovation. But since your concerns are theoretical anyway, that is secondary. I do not understand why one should waive the KfW loan from the outset.

Because we have to start / mostly complete the renovation before the house is even habitable. That means we would have to take out another loan (renovation) about 3-6 months after the first loan (house purchase). In your case, you can use the special termination right after 10 years to replace the loan with a new one – and take out new capital in the process. So for you, there is no problem with taking out a subordinated loan.

Thanks Alibert also for your contribution! I can very well understand your frustration...

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Has anyone else in this forum already had experience splitting the loans for house & renovation (gap of max. 1-2 years)? Possibly even with the KFW261 loan? I have now heard from our architect that banks might possibly also subordinate the KFW loan – has anyone had experience with this? I can hardly imagine that with the low margin for the bank... but of course, I’m happy to be proven wrong :)

Has anyone else in this forum already had experience splitting the loans for house & renovation (interval of max. 1-2 years)? Possibly even with the KFW261 loan?

I had a six-month gap between the loans. You just need to have a coherent concept in advance and be able to handle any resulting interest rate changes financially. It was more of a coincidence for me, but it was positive because interest rates dropped.

What interest rate risk is there over 6 months between the loans? If you cannot absorb a 1% higher interest rate, you should perhaps reconsider the project. I only have your best interests at heart; debt up to the limit of your financial capacity (and beyond) does not bring long-term happiness, no matter how beautiful the house is.

Which interest rate risk is there with 6 months between the loans?

Well, last year there were already very drastic differences within 6 months in some cases. I don't expect something like that within the next six months again, but I can understand that people might have more concerns about it today.

Or suddenly funding programs can be stopped earlier than expected.

That's why I say: Anyone who cannot absorb a 1% interest rate increase or the loss of subsidies should question the project.