Confusions of construction financing

Hello everyone I am going to build. I contacted an independent advisor (small company) regarding financing. Unfortunately, the communication was repeatedly less than satisfactory. But since our builder had recommended them to us, we overlooked it. Specifically, my question concerns a bank loan that I need for the house construction. Amount 155,000€. The advisor pushed a home savings contract on me for this amount, explaining it as obvious and mandatory. Due to increasing dissatisfaction, I turned to a second advisor (large German online bank). He says the home savings contract is pure rip-off and also presented me with an offer concerning conditions. So first question, is the home savings contract pure rip-off or is there some sense behind it? Second question: The first advisor referred me to one bank, the second to another bank, but same parent company, just different city, but both around my area. The first provider is 0.9% more expensive in interest than the second, who also said the home savings contract is a rip-off. How can that be? I asked the second advisor this question too and he said probably the other bank pays higher commissions to intermediaries, but as a large German online bank, they have nothing to do with the various commissions and therefore might be able to decide more in the customer’s interest. I would be very interested in your opinion. P.S. Advisor A told me everything will only become final and be set in motion once I have financing approval, then suddenly the home savings certificate arrived at my house, when I asked about it, I was told it couldn’t be, it would still be on her desk, shortly afterwards I was told "Oops, already sent, but not so bad, it can still be reversed." Can that really still be reversed, because according to Advisor B I don’t even need it, and also my advisor acted against the agreement and with the better offer from Advisor B, I won’t want to conclude anything through Advisor A and his referred bank anyway. Many thanks

Hello Mariella

so I would need a bit more information to be able to give you advice...
Above all, the interest rates, fixed interest period, initial repayment, and total term are interesting here.

The shorter the fixed interest period, the lower the interest rates.
If the offer from Bank B has a fixed interest period of 10 years (Attention! Just my guess) then the 0.9% difference doesn’t surprise me at all. But what will you do in 10 years? Could you still pay the loan if interest rates are back at 6-9%??

With option A ([Bausparvertrag (Bausparvertrag)]) you secure the interest rates over the entire term. Of course, a [Bausparvertrag] has contract fees. But if you want security, you have to pay something for it.
I myself also chose a model with a [Bausparvertrag]. I calculated that this model is best for me if interest rates in 10 or 20 years are above 5.5%. If they are still below then, I made the wrong decision; if they are above, I did everything right.

However, there are now already some banks offering fixed interest periods of up to 30 years even for "normal" loans...

So without further information, unfortunately, not much can be said about your specific case...

bei dem besseren Angebot von Berater B, werde ich ja eh nichts über Berater A und seine vermittelte Bank abschließen wollen.

hm - if you have already received the deed for the [Bausparvertrag], it makes me wonder whether you have already concluded something...
And then it will be practically impossible to get out of this contract again in the next 10 years...

Best regards
Micha :cool:

Building savings contracts are usually more expensive at the beginning than regular annuity loans. There are usually closing fees of 1% of the building savings sum. You do not repay the bullet loan, but always pay interest on the full loan amount. And on the amounts paid into the building savings contract, you only receive a small credit interest. Only after the loan is redeemed (presumably in about 10-15 years) by the building saver do you receive a good building savings loan interest rate.

While with an annuity loan, after the fixed interest period (10, 15, 20 years), you receive the then market-standard interest rates, which will probably be higher, with the building saver you definitely have lower interest rates. The advantage of building savings contracts thus lies in long-term interest rate security.

However, with the annuity loan, with the same total rates, you have already repaid significantly more due to the lower costs up to that point. Now it depends on how high the interest rate rises. The higher the future interest rate, the sooner the building savings loan will pay off.

If you now take out an annuity loan with a long fixed interest period (>=20 years), it may be that the interest rates are still better than with the building saver at the beginning and that after the fixed interest period so little residual sum remains that a building saver will never pay off, regardless of how the interest rates develop.

But as Micha already said: You seem to have already signed a contract. Whether you can get out of it again is questionable.

Hey then I’ll get a bit more detailed. Provider A: small 2-person company refers me to KSK Köln. Interest rate 3.5 Provider B: comdirect (my main bank) refers me to KSK Düren. Interest rate 2.6 Numbers, data, facts,... all the same, so really same contracts different data. Fixed interest period 10 years. With these numbers, I would pay 180€ more per month with A. That’s 21000. I already have a Riester building savings contract running, provider A knows that, if I pay the 180€ into it over the next ten years, I will also get allocation and receive a cheaper loan than the follow-up interest rate. Or I can repay 3% instead of 2% and have the same rate at B as at A and less loan after 10 years. I can probably still cancel the building savings contract

PS. In the next 10 years, even if it sounds shitty and you shouldn't spend money you don't have, there will be a little inheritance.

Sorry Marriella, to compare offers you have to publish everything or calculate the whole thing yourself.

I make an Excel table for something like this.

Annuity loan
Column
A Loan amount at the beginning of the month
B Installment
C Interest
D Repayment
E Loan balance at the end of the month

A1
Loan amount in €

B1
Installment in €

C1
=A1*interest rate/100/12

D1
=B1-C1

E1
=A1-D1

A2
=E1

B2
=IF(A2+C2 (Note the IF function is just to make the last installment bring the loan to zero and not below. Simplified =B1 would also work)

C2
=A2*interest rate/100/12

D2
=B2-C2

E2
=A2-D2

Then you can highlight the 2nd row and drag down from the little square at the lower right corner of the selection.
Then you see how the loan develops, you can play with the interest rates after the fixed interest period.
If you play with the interest rate, don’t forget to drag the cell down again, otherwise you only change the interest rate for that one month.

For the building savings variant I always make 2 tables.
1. The interest-only loan
There I set the installment as high as the interest.

2. The building saver
For the building saver you modify the table so that payment + interest credit are added.
Only when the building saver repays the interest-only loan, you take the annuity loan table again.

If you now also make a column with the sum of installment and sum of building savings payment, you have the total burden and can compare it directly with the annuity loan.