Construction Financing - Fixed Interest Period

Hello everyone,
since I am possibly planning to buy a mid-terrace house, I wanted to ask what your opinion is on the fixed interest period. I had a consultation with a mortgage broker (independent): financing amount 480k (with 20% equity, which has already been deducted). I was recommended 2 KFW modules with 100k each and 0.95% interest with 10 years fixed interest + 280k also with 0.95% over 10 years. The broker said he would stick with the 10 years because 15 years are not necessarily worthwhile, as due to the interest surcharge for the 15 years you can repay less. That makes sense, but you just don’t know how mortgage interest rates will develop.
I once went to Sparda (as part of another offer). They rather insisted on a long fixed interest period. 20-30 years with a building savings contract. I would probably get another offer if I actually buy the house. Still, I would be interested in your opinion on the fixed interest period and also the KFW modules (these are not for energy efficiency, but because of 2 children).

Thank you in advance.

Hubi

This is a typical topic where you get 4 different answers from 3 people. Personally, 10 years would be too risky for me. I recently read that the ECB wants to adjust interest rates in 2022/23. If you sign up for 15 years or longer, remember that you can terminate your loan after 10 years. If interest rates remain stable - terminate and get a better contract (more equity through corresponding repayments over the years = less interest). The same applies to falling interest rates, of course. With rising interest rates, you could potentially have a problem after 10 years. You would have to sign a new contract anyway. With 15 years, you would have at least 5 more years to use various special repayments and minimize the remaining debt accordingly. We therefore have, for example, different contracts for 10, 15, and 20 years.

The KFW components could be a must-have for the 0.95% interest rate, as the KFW presumably ranks subordinately in the land register. At least that was the case with our development bank and this gave the bank enormous security, which affected our interest rate. If something unexpected happens to you, they will get the 280k back 99% at a house price of 500k.

The KFW components could be a must-have for the 0.95% interest rate, as the KFW is presumably subordinate in the land register. At least that was the case with our development bank and that gave the bank enormous security, which affected the interest rate for us. If something unforeseen happens with you, they get the 280k back at 99% on a house price of 500k.

That is true. But that means it’s quite good then. Maybe one can split the non-KFW component into 3 parts with 10/15 and 20 or at least 10/15.

That's how it is. But that means it's quite good then. Maybe the non-KFW component can be split into 3 parts with 10/15 and 20 or at least 10/15.

I'm not really familiar with KFW, but to my knowledge they have the corresponding components and you either take them as they are provided or not. It could be that 15 or 20 isn’t even possible for the requirement you have in mind. Basically, though, you can't go wrong with them.

The KfW components with the same interest rate have no added value - it is best to finance without them and thus remain more flexible.

Question of belief. I don't think interest rates will rise again. Whether you will do well with the Sparda product including the building savings contract... probably not

just go to an agent