Construction financing: three models A, B, or C help me!!

Hello dear people,

a very simple question but a very difficult decision that we now have to make. I would appreciate some nice decision help from you. The loan amount is: €181,000. Total term approx. 25 years

Bank A

Riester Loan (both employed and two kids)
€71,000 / 3.43% effective / 3.00% repayment / fixed interest rate 15 years --> In my partner's name
€60,000 / 3.40% effective / 1.62% repayment / fixed interest rate 15 years --> In my name
KfW
€50,000 / 1.92% effective / 4.37% repayment / fixed interest rate 10 years --> KFW 153

Bank B

€131,000 / 3.08% effective / 2.50% repayment / fixed interest rate 15 years
€50,000 / 1.80% effective / 2.63% repayment / fixed interest rate 10 years --> Kfw 153

Bank C

€70,000 / 2.93% effective / repayment via building savings contract €192 monthly / fixed interest rate 15 years
€61,000 / 3.27% effective / 2.50% repayment / fixed interest rate 15 years
KfW
€50,000 / 1.80% effective / 2.63% repayment / fixed interest rate 10 years --> KfW 153

All models correspond to our time horizon and the monthly rate of approx. €870.
I would like to know if B might not be better than A? Although you have the state subsidies here, the interest rate is 0.4% worse!!!! Ideally, of course, would be the interest rate of B with the subsidies from A!! :)

What bothers me about C is actually the repayment through a building savings contract??? I would prefer to repay directly!

What do you think? A, B or C??

Thanks for your help

I can advise against Variant A. Google the pros and cons of Riester financing and form your own opinion. For us, the conditions of the KO

Hello STSBergheim

Personally, I can only advise you against option A. The disadvantages of Riester are way too big for me as well.
Just this one argument alone:
If you ever want or have to stop living in your own home, you have to pay back all Riester contributions. And do you already know if you might need care and have to move into a nursing home in old age??

Just this thought was enough for me to end my Riester considerations...

Regarding option C, I don’t understand why only part of the money is paid off through a building savings contract and part through an annuity loan. I would say, either one or the other.

A building savings contract has the huge advantage that you secure the interest rate right down to the last euro of repayment. You already know today what you have to pay and when. You have zero risk.
For that, it is somewhat more expensive, and such a contract can have a few pitfalls – you have to be very careful.

Annuity loans have the interest rate risk after 15 years. For example, with option B, after 15 years you still owe around 69,000 euros – and nobody knows what the interest rates will be then...
Just calculate it yourself once more: Can you still pay the 69,000 euros in 15 years at an interest rate of 5%, 6%, or 7%??
If you don’t already have cold sweat on your forehead now, then option B could be something for you ;)

The same applies to the KfW loan:
Outstanding debt after 10 years: approx. 35,600 euros

I myself have a larger financing running – therefore after 15 or 20 years of fixed interest, I would still have a significantly larger outstanding debt and thus a higher interest rate risk – which is why I chose the option with the building savings contract. I pay a bit more now than with an annuity loan, but for that, I already know my monthly burden in the year 2040 down to the cent.

Which option is the best?? Ask me again in 20 years :p
The question is, are you a gambler or a scaredy-cat? Or, put differently: How much is interest rate certainty worth to you?

Alternatively, there are now banks that also offer 30 years fixed interest rates on annuity loans... You should maybe ask your banks about that again... Of course, the interest rate will be higher then...

Best regards
Micha :cool: