Construction financing offer okay?

25 years fixed interest rate sounds good so far, 2% repayment also fits. The idea of using a home savings contract to replace the KFW loan I also had. The rate from the home savings contract should also fit so that the KFW loan can eventually be paid off. Will you manage with the 220K€? We have a similar amount of equity and want to build, but are about 50K€ above your planned price.

I have now calculated in parallel what would happen if you took the KFW repayment at 185€ + 150€ = 335€ (if possible with KFW) and dropped the home savings contract. After 10 years there would still be around 15.5K€ remaining. Assuming a follow-up interest rate of 5%, you shouldn’t be worse off than with your home savings variant. (Conditions assumed by me: 0.5% credit interest and 1.77% loan interest) The interest rate risk with a remaining sum of 15.5K€ is relatively manageable, no matter how high the interest rate goes. And you have no costs for the home savings contract. (I guess you have a savings target of about 35K€, meaning 350€ costs.)

What you might also want to check again is what interest conditions a 20-year fixed interest rate has. If it is more than 0.2% better interest, the future interest rate after 20 or 25 years would have to rise to over 7% for the 25-year fixed interest to be better than the 20-year one. If you want to make special repayments, this ratio would shift even more in favor of the 20-year fixed interest. But beware: these were all calculation examples assuming an interest rate improvement of 0.2%.

Regards Musketier

Hello Musetier.

Thank you very much for your reply.

We should actually be able to manage with the 170,000 euros, but the exact calculation is still being done. However, it should be noted that we do not have to buy any land. We are building on the property of my boyfriend’s grandparents. The land has already been transferred. We are demolishing a barn there and then building new. The lowest floor of the barn (garage, laundry room, etc.) will be preserved and we will build on top of it. Because of this, we also do not need a foundation slab, as the ceiling of the ground floor can be used as a foundation slab.

I don’t think anything can be changed with the KFW financing, but I will look into it again. I will have the proposal with the 20-year fixed interest rate recalculated. So far, we have only obtained one offer and wanted to gather more information anyway.

Regards Emil1310