Concrete financing offer - how much must be "left over"?

: thank you very much! The renovations only affect the privately used part. The rental apartments remain as they are. Specifically: The house costs 350,000 euros, so about 120,000 for the self-used apartment (this is almost completely payable in cash), then 230,000 for the two apartments, this amount must be taken up. The renovations and conversions of 170,000 euros only affect the self-used apartment and must also be taken up. It will probably really be best to make an appointment with a tax advisor. But back to my original question from the very beginning: How feasible, how stable would the whole thing be in your eyes? If my wife goes back to working part-time after 2 years, that should work well (very well?), right? Thank you!

Overall, this is not a bad starting position at all, and if you can't save that much for 2 years, it's not a big deal as long as you can replenish the reserves at some point again.

I think you are calculating yourself worse than you actually stand.

Thank you for the answer. yes, that may well be, I am generally a cautious person. presumably, with the parental allowance and then afterwards, e.g., my wife working part-time, it is really manageable.... but I have already learned that you have to be careful with the building savings contract when it comes to the division between owner-occupied and rented. what other pitfalls are there, what else should I pay attention to? the banks do actually sell everything as easily manageable ...

The home savings contract is often more expensive because during the saving phase no repayment is made, but (nowadays almost without interest) savings are accumulated, while the loan still shows the full amount. This means you pay interest on a higher amount. Only when the home savings contract has been running for a long time can the construct become interesting. However, this is often contradicted by the desired special repayments. Ultimately, a home savings contract is a bet on sharply rising interest rates. Presumably, very few home savings contracts have won the bet in the last 2-3 decades.

In the case of renting, the situation looks different. There, the interest can be deducted as expenses, reducing taxes. Any special repayments should primarily be made for the loan on the privately used apartment. Here I would pay attention to high special repayment options or repayment changes.

Hello everyone,

I would like to ask / inquire again for better understanding here. Basically, I agree with you, especially when looking at the last few years. Only currently, from my point of view, the situation is different. Interest rates will hardly be able to fall further, so one is speculating on stable or rising interest rates. In my opinion, the home savings contract has the advantage of securing low interest rates on the entire loan amount. In comparison, a pure repayment suspension + home savings contract compared to a full amortization would save us a total of €60,000 over the term. (Loan amount €400,000, 30 years term).

: Would you still stand by your opinion in the current interest rate situation? I would be interested to hear your assumptions about that.

Best regards, Sascha

Of course, the usefulness of a building savings contract depends on individual assumptions. The longer the term and the higher the interest rate assumed after the fixed interest period of the annuity loan, the more sensible the building savings contract. That is undisputed.

I made assumptions for myself personally at the time of the loan agreement (2012). Even back then, the general assumption was that interest rates could not go any lower, and of course I also assumed rising interest rates after the fixed interest period for my calculations. My calculations showed that a 20 or 30-year loan does not pay off for us, let alone a building savings contract. So far, I have been proven right. Especially since we make regular special repayments. In hindsight, a 10-year (or even better, a 5-year) fixed interest period would probably have paid off for us instead of a 15-year one. But since our financing is not overly tight, according to my calculations, even a strong interest rate increase after 15 years would not have completely derailed us. By now, I hope that after 15 years we will be almost debt-free. That was not foreseeable in 2012.

You need to get various offers for yourself and then calculate different scenarios. You will probably then find that long fixed interest periods and the building savings contract only pay off if you assume strongly rising interest rates, and then you have to judge for yourself how likely you think falling, stable, slightly rising, and strongly rising interest rates are, and whether you can cope with a strong interest rate increase if necessary. The calculations can be done for you if needed, but you have to make the assumptions. Your fully amortizing loan is of course the all-round carefree loan, but that of course costs.

Due to the ECB's target setting regarding inflation and also the debt ratio of the EU countries, I personally consider strongly rising interest rates >5% unlikely. That would lead to a chain reaction causing a major crash. Such a strong interest rate increase will therefore only occur if all the tools of the ECB and all European countries have already been exhausted, and I do not even want to imagine what would come then. However, I also never would have thought negative interest rates were possible. So you can always be surprised.

All this is my personal layman's opinion.

With such a large building savings contract, the closing fee would totally deter me. We do have a building savings contract too, but a small one, and only because somewhere the housing construction premium has to go. It’s not much, but still. Against all advice, we fixed the interest rate on our construction financing for 5 years in 2012. Everyone said the interest rates couldn’t go any lower... now I’m very glad, because the rate has halved again from 2.5 to 1.2 – and the latter is even for 10 years. Also, our follow-up financing will be much cheaper, since instead of 100% financing 4 years ago, we now have only a 60% loan-to-value ratio, as our house is worth twice as much today and 30k euros have already been repaid. We can already benefit from this after 5 years and not only after 10 or 15 years, during which we would have paid a significantly higher interest rate than the 2.5%. That’s I don’t know how many thousands of euros in interest saved. Well, it could have gone differently, but I don’t believe rates will rise significantly again. And in 10 years, the remaining debt will be so low for us that it wouldn’t matter anymore. Particularly nice is that the rate stays exactly the same, but instead of repaying 2%, from next year on we will repay 3.25% (plus special repayments). Especially in the beginning with a high remaining debt, that really makes a big difference.