Construction project 400k: How much to add floors?

I took 10 years and pay 1.5%.

Now my 20 years at 1.68% hurt even less :-p

I'm happy for you, maybe you have a higher equity ratio or fewer prepayment options (here: Sondertilgung possible at any time, up to 40k per calendar year) or simply a better offer. If 10 years had only cost 1.18% at your bank, I would still have chosen 10 years.

When I compare 1.5% and 2% interest rates and set a cut-off date after 10 years, I have paid off 19,000 more under my conditions (assumed: 400,000 loan, 1,400 installment). I can already use that to put a down payment on the next BMW.

I am glad about the lively discussion, but we are slowly getting a bit off topic.

Do I understand correctly that basically
1. everyone unanimously advises against planning a higher budget?

2. significantly better conditions are only to be expected with 40% equity, which realistically I will not reach even in 5 years?

Do you even see any possibility to realize the construction project?

Regards

Regarding 1: what good is it to you if we advise against it and your budget does not fit the house. If you can have the house with everything for 190k, then 400k is an amount I would finance. Everything else is tying yourself up and counting every euro.

Hello thread starter,
We also financed 400k, but over 10 years or 8 years (2 loans). However, we are repaying significantly more and have a higher salary. Therefore, I find that already quite borderline and in your place I definitely wouldn’t take on more credit, even if it would certainly be feasible from the bank’s side.

I don’t see the interest rate risk as that critical, though.
I thought: If interest rates rise, inflation rises too, as well as salaries, and a few hundred more in installments are basically manageable over 10 years.
Why?!
If you calculate 2.5% more salary every year, which in my opinion is not exaggerated (see e.g. the current collective agreement TvÖD, about 3% p.a. + guaranteed pay grade increase), after 10 years you end up at €5370 instead of €4300.
€1400 installment on €4300 is 32.5%.
If the installment rises due to interest increase from €1400 to e.g. €1700 after 10 years, the share of your salary that you spend on the installment at 31.7% (€1700 to €5370) is still lower than today!
You can play around a bit with the numbers like that. Now you could calculate what level the interest rates would have to rise to in 10 years for the installment to reach €1700. And again consider what happens to salaries if inflation suddenly gallops. Then 2.5% is probably once again a very conservative figure.
But you have to keep in mind that many, many other factors also play a role and these model calculations are always based on assumptions and everyone has to make their own assumptions and estimates. After that, you can also commit to a concept with a good conscience (long fixed interest period or shorter, etc. etc.). Such lines of thought like above (this is just one of many) can help when deciding on a concept.
Maybe my thoughts help with your decision-making.

Significantly better conditions are only to be expected with 40% equity

It has already been hinted at, but still once again: Very important thresholds are 100%; 97.5%, 95%, 90%, 85%, ... It also depends on the bank. But there is a wide range in the interest rate between 40% equity ratio and 2.5% equity ratio.

Regarding interest rate risk:
- Those who have, can :P
- Inflation is our friend! It just has to come nicely and evenly.
- An interest rate shock shortly before the end of the fixed interest period would just be unfortunate.
- My very personal crystal ball, referring to Japan, says that interest rates will remain relatively low for a very long time.

(We have fixed the largest part anyway for 20 years. Security.)

Hello thread opener,
We also financed 400k, but over 10 years or 8 years (2 loans). However, we are paying off significantly more and have higher salaries. Therefore, I find that quite on the edge and in your place, I definitely wouldn't take on more credit, even if it would be feasible from the bank's side.

I don't see the interest rate risk as that critical.
I thought: If interest rates rise, inflation will also rise as well as salaries, and a few hundred more in installments are basically manageable in 10 years.
Why?!
If you calculate a 2.5% salary increase every year, which in my opinion is not exaggerated (see e.g. current collective agreement TvÖD, about 3% p.a + guaranteed step increase), in 10 years you end up at €5370 instead of €4300.
A €1400 installment to €4300 is 32.5%.
If the rate increases due to interest rate rise from €1400 to e.g. €1700 after 10 years, the share of your income that you spend on the installment at 31.7% (1700 to 5370) is still lower than today!
You can play around a bit with the numbers in this way. Now you could calculate to what level interest rates would have to rise in 10 years for the installment to reach €1700. And at the same time consider what would happen to salaries if inflation suddenly should gallop. Then 2.5% is probably again a very low estimate.
But you have to bear in mind that many, many other factors come into play and these model calculations always rely on assumptions, and everyone has to make assumptions and estimates for themselves. After that, you can also confidently commit to a concept (long fixed interest period or shorter, etc., etc.). Such lines of thought as above (this is just one of many) can help to decide on a concept.
Maybe my thoughts help in your decision-making.

Thanks for the suggestions and assessment. Besides age levels, a higher classification will also take place, which is why income will foreseeably make a small jump. Overall it remains manageable in the public sector.
Would you please explain the idea and concept of the two loans?

It has already been hinted at, but still once again: Very important thresholds are 100%; 97.5%; 95%; 90%; 85%; ...

You do not mean equity but the financing requirement?