Construction costs are currently skyrocketing

And I had very tough negotiations 1.5 years ago because the bank only wanted to give me a 15 basis points discount for my KfW components. (0.8% interest)

Well, good luck with the follow-up financing. KfW is currently at 1.92%.

Well, have fun with the follow-up financing. KfW is currently at 1.92%.

hm, I think I'll somehow manage to finance the 2x50k in 8 years. lol ey

It was €170,000 for a semi-detached house including partial modernization (village in Saxony-Anhalt). Couple together for one year with just over €3K net household income. The risk is manageable and the loan could also be serviced by the man alone in case of separation.

Ok, that is of course actually manageable. For a "normal" new build, these conditions would already be a different ballgame.

And now just imagine you have a reason (divorce, job relocation, construction project becoming too expensive and therefore pulling the ripcord...) to have to sell after a short time. I would call that a hefty prepayment penalty for the bank: 3.92% over 30 years.....ouch ouch ouch :eek:

Prepayment penalties may only be calculated over 10 years. Minus special repayment options, increased repayment rate, risk default, etc. And if the mortgage covered bond interest rates have risen in the meantime, the bank can safely reinvest the money. That must also be offset. If the interest rate falls in the meantime, then of course it becomes even more expensive... Under certain circumstances, the bank might even "be pleased" (somewhat wrong expression for that), as capital can be reinvested at a higher interest rate or lent out again in a new credit transaction with better interest.

If the interest rate falls in the meantime, it naturally becomes all the more expensive ...

A short anecdote on the side:
The prepayment penalty can also be higher than the interest income lost by the bank. This is because the Bundesbank yields are used as the reinvestment interest rate. And that was negative for quite some time.
Some customers were pretty pissed off that the prepayment penalty was higher than the interest they would have paid over the remaining term.

A short anecdote on the side:
The prepayment penalty can also be higher than the bank's lost interest income. Because the Bundesbank yields are used as the reinvestment rate. And that was negative for quite some time.
Some customers were quite pissed off that the prepayment penalty was higher than the interest they would have paid over the remaining term.

Can it then conversely also happen that no prepayment penalty at all is charged because yields have risen so much in the meantime? That has been the case in recent months and will probably continue for some time ... Apart from processing fees and the like, of course ...