Construction financing with life insurance?

The question is whether the life insurance policy is even needed for pledging, or if the bank is satisfied with the property as collateral.

Either a repayment suspension loan + pledged life insurance. Since the bank then has double security, this should be reflected in the interest rate. Then the installment consists only of interest (at 3% about €250).

Or

an annuity loan with 1% repayment. Since you seem to be somewhat older, I would try to align the fixed interest period roughly with the maturity of the life insurance policy. Here I would definitely not take out a new retirement provision, but try to reduce the loan through special repayments so that at the end of the term you still have most of your life insurance as retirement provision.

But this has to be calculated to see which option is cheaper.

The question is whether the life insurance is even needed as collateral, or if the bank is satisfied with the property as security.

Either a repayment suspension loan + pledged life insurance. Since the bank then has double security, this should be reflected in the interest rate. Then the installment consists only of interest (at 3% about €250).

Or

an annuity loan with 1% repayment. Since you both seem to be somewhat older, I would try to align the fixed interest period roughly with the maturity of the life insurance.
Here I would definitely not take out a new retirement provision, but try to reduce the loan through special repayments so that at the end of the term you still have the majority of your life insurance as retirement provision.

But this has to be calculated to see which option is cheaper.

Yes, we are both already "older".

There is not much equity, about €10,000-15,000, since we both had to start over from scratch three years ago due to divorce, etc.
Since we also thought no bank would finance without security or equity, the idea of life insurance came up in the first place.
And since it should be something older, we would rather invest the current equity into the house.

Of course, if there are banks that can fully finance such a thing without equity, you could actually approach it that way and still have low and manageable burdens.

Hello Goldi,

so far, I don’t know of any bank that would give a final approval. I don’t want to discourage you, but you can see that many don’t view the current interest rate situation very favorably.

Haven’t you contacted common brokers? An Interhyp, for example. Maybe it fails due to other criteria and not because of the life insurance.

You also have to look at the overall situation.

Good luck

PS: I’m still not convinced by your plan You can also continue to save in the life insurance and contribute to repayment. If it gets tight at 100k, I generally see it in a negative light... Just my personal opinion

It doesn’t matter if you’re not convinced You also didn’t understand what is important to us.
And it will not get tight at 100k, we could also just go and build a house and pay 1500 per month for it. But that’s exactly what we don’t want, too often you see how quickly that fails. And I’d rather encounter incomprehension than fail. = life experience

Hello

no, I am not really convinced about what you are planning. However, I am not a loan decision-maker either. Just talk to a broker or your main bank to see if they would support such a setup. Possibly you can get the amount without repayment. If the interest rate is acceptable, then go ahead. But I still believe it will be difficult to impossible.

Good luck

So, I really have no idea about it, just know that my parents financed the house with something like (Kredit +LV). That's why I enter two keywords in Google... financing with life insurance... loan... or something similar, and only warning notices appear alongside the explanation of why it was done in the past. -> tax savings. But this no longer applies today, so the possibility of this type of financing no longer has any meaningful existence.

So, I really have no idea about this, I only know that my parents financed the house this way (loan + life insurance).
That's why I enter two keywords in Google... finance with life insurance... loan... or something like that, and only warnings appear alongside explanations of why it was done in the past. -> tax savings.
But nowadays those no longer apply, so this financing option no longer makes sense.

That's all correct. In the past, life insurance and loans were combined just like today’s building savings combinations with the tax advantage as a side effect. Nowadays, no one uses the life insurance-loan combo anymore because the tax benefit was stopped by the legislator and the costs for life insurance are too high.

The difference is that in the current case the life insurance has existed for a while, the costs have already been paid, and the life insurance has a value. It’s like having a building savings contract that I have already paid the 1% cost for, have borne the low-interest period, and still wouldn’t use the building savings contract for financing.

Despite the problems with insurers, it should be undisputed that a certain amount will come out at the end of the term, regardless of whether the interest rate will be above or below the current guaranteed interest rate. So why not coordinate the financing to the end of the life insurance and use the credit balance as collateral for better loan rates.


Since none of us are financial professionals, the complete financial background of the OP is missing, and the structure is not a standard product, here is simply the reminder to consult a professional (banker, financial advisor, broker) and obtain several offers there. Also, a tip to involve a building surveyor or similar for the assessment of the property.