Compare financing offers

Here I am again with a now more concrete offer from our financial broker. The loan amount is €245,000.

In an initial offer two weeks ago, the KFW was still included, resulting in a mixed interest rate of 2.6%. However, the KfW only offers a 10-year fixed interest rate for the €50,000, while the loan of €195,000 had a 25-year fixed interest rate and would have been paid off after 25 years.
The monthly payment was €1,140.

Since we would like a complete fixed interest rate over the entire term, we requested a new offer without the KfW. These are now the two options:

1. Annuity loan
Loan amount €245,000
Nominal interest rate 3.22%
Fixed interest rate period 25 years
Monthly payment €1,080
Remaining debt €30,000
Total term 29 years

2. Combination of building savings loan 40% + annuity loan 60%
a) Building savings loan
Loan amount €100,000
Nominal interest rate 2.04%
Fixed interest rate period 12 years
Savings contribution €170 + €270 building savings contract
Building savings loan €60,966
Nominal interest rate 2.33%
Monthly payment €440
Total term 26 years

b) Annuity loan
Loan amount €145,000
Nominal interest rate 3.22%
Fixed interest rate period 25 years
Monthly payment €655
Remaining debt €15,840
Total term 29 years

How do you assess this offer or the offers?
To be honest, I don’t fully understand the type of financing with the building savings contract and would therefore prefer to steer clear of it. Even if the sum of all payments with the building savings combination contract is almost €15,000 lower.

And why is "Total term 29 years" listed everywhere when the fixed interest rate expires after 25 years?

Information about us:
Two full-time earners, one of whom is a civil servant
No children
Net income €4,700 (€2,800 + €1,900)
No ongoing loans
Existing equity goes into furniture + outdoor facilities (not yet in place), the rest serves as a reserve for unforeseen expenses
Current rent €1,100

Hello,

quite simply, because with both models YOU ARE ONLY DONE WITH THE ANNUITY (RATE) NOT finished.

1. Annuity loan
Loan amount €245,000
Interest rate 3.22%
Fixed interest period 25 years
Monthly rate €1,080
Outstanding balance €30,000
Total term 29 years

That means with model 1, you pay €1,080 for 25 years (€324,000) and still have €30,000 outstanding balance. The bank models assume you have the same interest rate after 25 years and calculate a fictional total term. So without special repayments you will not see a zero after 25 years.

Personally, I find the interest rate of 3.22% too high. Better to choose 20 or 15 years.

That means in Model 1, you pay €1,080 for 25 years (€324,000) and still have a remaining debt of €30,000. The banks' models assume you have the same interest rate after 25 years and calculate a fictitious total term. So without special repayments, you won't see zero after 25 years.

Personally, I find the interest rate of 3.22% too high. Better to choose 20 or 15 years instead.

Thanks for this initial assessment! But if the interest rates are at 5% in 15 years, we haven't gained anything from that. That is probably the risk.

And do you also think that the option with the building savings contract is not a good idea?

We had actually asked the broker for an offer with a 30-year fixed interest period.

For comparison, here is the first offer:

Loan amount €245,000
Interest rate 2.6% (Mixed)

Annuity loan of €195,000
Installment €920
Fixed interest period 25 years
Interest rate 2.82%
Remaining debt €0
+
KfW loan of €50,000
Installment €58, after 1 year €200
Fixed interest period 10 years
Remaining debt €27,000

Is this to be discarded immediately, or is it to be considered the best?

no idea, would have to recalculate.

I come to a total rate of over 1.095 with model 2, so it seems to be cheaper

By Model 2 you mean the Bauspar combo, or what I wrote in my last post – the one with the KfW loan?