Construction financing for mother

Hello forum,

The basic situation is as follows: The mother (civil servant) owns a single-family house and loans that are soon to be rescheduled.

The goal is low monthly burdens.

Loan 1:
50,000 euros (at the end of the term), without repayment!, 4.65% interest, from 2010 to 2020

In connection with a building savings contract (repayment suspension loan with redemption through building savings contract)

However, there is 20,000 euros credit at the end of the term.

Loan 2:
55,000 euros (at the end of the term), 1.5% repayment, 4.5% interest from 2010 to 2020

Loan 3:
40,000 euros (at the end of the term), 2% repayment, 1.9% interest from 2015 to 2025

About 70% of the house is paid off nevertheless.

Loan 3 is fine.
Loans 1 and 2 are of course very annoying and especially Loan 1 I see critically.

Now the house bank proposes the following:
Redeem Loan 1 and Loan 2 in 2020 with a repayment suspension loan with redemption through a building savings contract. (Term and fixed interest rate 10 years)

Interest rate for building savings: 0.10%
Completion fee: 740 €
Credit interest for building savings: 130.35 €

Monthly total burden: 677 €
Of which 565.38 € savings contributions
and 111.62 € interest rate

My opinion on this:

There is a high completion fee in this repayment suspension loan, low interest (interest not even a quarter of the completion fee) and a monthly burden that misses the overall goal. (here the question arises whether the mother communicated this correctly, because the bank's offer has nothing to do with the goals)

After 10 years (2030) one would be debt-free regarding these two loans, but this is not the goal.

I think this only looks like commissions. For loans, they should no longer charge fees and maybe now increasingly try to sell something like this?

I can see no advantage at all. My mother also gets every cheap financing as is (civil servant, house almost paid off, etc.)
I consider the argument ("At the end of the term you get a low-interest loan") nonsense.

Therefore, get an offer:
Normal mortgage loan, redeem loans 1 and 2
1% repayment
10 years term and fixed interest rate
No frills.
This results in a low monthly burden.

I look forward to second opinions, tax aspects and maybe possibilities to get out of the loans earlier (from the high interest rates).

Thanks in advance.

So I cannot assess the overall situation, I lack the expertise for that. But 1% repayment in today's times combined with the 10-year fixed interest period is absolutely wrong in my opinion. A large part of the debt remains, which will have to be renegotiated after ten years.

The following lines will sound "somewhat" rude. For that, I would like to apologize in advance, but I will not change my choice of words.

What the hell is that supposed to be? If there is a valid reason for this action, it belongs at the beginning of this post, otherwise only nonsense can come out of it. Joedreck hits the nail on the head.

There is a cabin whose value is probably estimated somewhere just under 500 TEUR.

And then there is a remaining debt of something around 145 TEUR at the respective interest fixation end.

Offering an offer now with 1% repayment (from the bank’s side) is already negligent in my eyes.

My suggestion (if there is no more information) is the following:

Loan 1:
The current rate is probably somewhere around 360 euros (interest + savings of the home savings contract). Use credit balance to pay off, remaining 30 TEUR.

Loan 2:
How high is the loan installment here? Probably also about 350 euros.

Loan 3: Let’s leave that as is.

Combine loans 1+2 with an amount of 85 TEUR. There should be a top condition at the loan-to-value ratio, cautiously assuming 2% for example. With a rate of around 700 euros (current burden) the whole topic would be almost off the table in 10 years (remaining debt 10 TEUR). No more "risk," no home savings contract, nothing. Problem solved. That is, without further information, the direction in which responsible advice should go. (Corresponds to an initial repayment of about 8%)

If finances are tight (I just assume that because there is no father/husband (anymore?)?!?!), you can still adjust the repayment rate a bit. But not more than necessary. That means for me, reduce repayment to a maximum of 4% (saves about 200 euros), so that the issue is resolved in 20 years. Since it has already been running for at least 10 years, the financing would then be complete in 30 years, which corresponds to a usual term.

Let me say it clearly again now: 1% repayment is IRRESPONSIBLE (without alternative replacement savings)

You assume that she wants to have paid off the house at some point. But simply not everyone wants that; they just want to use it until the end and preserve liquidity. But since it is not even clear whether the property is owner-occupied, this is just speculation.

That is correct. I assume personal use. And above all, I assume the WIKRL. Without it, it simply won't work.

Otherwise, the OP must provide more information. Otherwise, one can only assume the standard for this forum.