Construction Financing - What Installment Amount to Choose in Financing?

Hello. We are planning to build a house and are grateful for advice from you regarding financing. Initial situation:

[*]I inherited a plot of land in Berlin and want to build a single-family house there together with my partner in 2016. [*]Beforehand, an existing building must be demolished.

Financial situation:

[*]She (31 years old, 2,400 €/net net) [*]He (34 years old, 2,250 €/net net) [*](1st child on the way, parental allowance from mid-2016, then reduction of working hours) [*]Equity capital: 20k € (checking account) plus plot of land (value approx. 200k €) [*]Demolition costs: approx. 20k € [*]New construction costs (single-family house, 175 sqm, without basement): approx. 300k €

So we need financing of 300k €, which we would like to keep as "simple" as possible (no Riester pension, no building savings). We assume that we can afford a permanent monthly rate of around 1,200 €. Additionally, we expect incidental costs of 500 €/month. How do you assess the situation? Is the amount of the monthly rate feasible and reasonable? Thank you for the advice.

Yes and yes. You can pay everything else through [Sondertilgung].

Yes and yes. You can cover everything else through Sondertilgung.

Concise response Thank you!

May I ask why no building savings? With that, you have the chance to secure the interest rates for a long time and still benefit from the low rates of the short term. Because if you use a long fixed interest period with a regular annuity loan, it will be more expensive for you in the long run. We are currently on the same topic. We use the KFW loans with a building savings contract for the remaining amount. After 10 years, this takes effect and we at least have a fairly low interest rate. Interest rates over 5% would break our necks.

because: next year you will also get longer fixed interest periods with KfW and then the security with a 20-year fixed interest period from annuity+KfW is given, but you start repaying in full immediately (with the building savings contract you initially do not repay) and do not have the fees of the building savings contract. These two savings often offset the slightly higher interest.

Whereas no one knows what the KfW will charge for it then - it's still almost half a year until then.