Construction Financing - What Installment Amount to Choose in Financing?

I was surprised that my bank only offers a max. repayment of 5%. Since I want to repay more, I can only do this through regular special repayments, which can be made as often as desired throughout the year up to a percentage agreed in relation to the loan amount (5% of it in my case). On closer inspection, this model definitely has its advantages. You only have a lower fixed agreed rate, but you can increase the repayment via standing order. And if you ever get into financial difficulties, it can be adjusted as often as needed without any problems. Of course, you have to be consistent, otherwise after the fixed interest period expires, there will be more remaining debt than originally intended. If I fully exploit the possible 5% special repayment per year, I can even be finished shortly before the end of the fixed interest period. But since interest rates are currently so favorable, that does not have to be the case if it would otherwise mean cutting back or postponing further investments in the house.

My strategy for financing has always been different... First, just like you, I asked myself how much installment I can afford. Let’s simply say 1200,- EUR. Then I calculated the smallest possible installment. Example: 300,000 EUR, repayment 1%, interest rate for 10 years: 2% -----> results in an installment of 750 EUR (you can calculate this with any repayment calculator on the internet). I agree on this 750,- EUR with the bank. Now, but very important: the difference to the 1200,- EUR (which is 450,- EUR) is consistently (preferably by direct debit) saved on a separate account. Advantages: in case of emergency you are always financially liquid, the installment is not too high in an emergency, with some luck the interest on the balance will even increase in the next 10 years. Who else would lend you money for 1..2 %? There is no need to pay off "at all costs." I like to have money in my own account rather than giving it all back to the bank. The whole financing is somehow more relaxed this way. Personally, I invested my monthly savings rate in a solid fund. Of course, the price often fell... but it did not unsettle me.. low buying prices are great... planned selling should then (sometime when the 10 years are nearing) happen at a high price.