Decision aid: special repayment or saving equity for a single-family house?

After 10 years have passed, you can cancel at any time

From the date of full payout, just google it, it is well described. I would zap away the KFW loan. Be careful, the KfW tends more to incorrectly calculate the VFE. The registered plots are below 60% of the (market) value of the condominium. This means, with the right bank, you get a loan (land charge minus residual debt; approx. 85-90k) on good terms. If your municipality is as slow as mine, it won't happen anymore in 2020. So Baukindergeld might be too tight and with existing home ownership, you’re excluded anyway. Also, how does the allocation of the plots look? In my case, development is currently underway and all the plots are allocated. To get one, you had to register on the waiting list at the latest 2 years in advance and have very good criteria. The plots were allocated according to points. The price was only announced after allocation. This caused the first €20k reserve in my estimate to vanish into thin air. Especially when buying from the municipality (and with development yet to be done), it is better to handle the plot purchase price without leveraging it. So a new loan on the condominium plus equity should be available for the purchase of the plot. This way you can better plan the actual loan for the house construction and avoid commitment interest as much as possible.

If your municipality is as slow as mine, nothing will happen in 2020. Baukindergeld could therefore be too tight, and with existing homeownership, you’re out anyway. Also, how is the allocation of the plots going? They are currently being developed here, and all the plots have already been allocated. To get one, you had to be on the waiting list at least 2 years in advance and have very good criteria. The plots were allocated according to points. The price was only announced after allocation. With that, the first 20k € reserve from my estimate disappeared into thin air.

The municipality has been planning the housing area for at least 5 years. The area is definitely to be developed in spring. There is no waiting list for the building plots. You have to APPLY. I assume we have good chances. We live in the municipality and have 2 children. We’ll see... I also don’t know the exact price yet. The plots the municipality sold a few years ago (similar location) cost about 170€/sqm. I hope they will be around 200€/sqm this time.

Your responses are great – thanks. Unfortunately, I’m afraid that by the planned purchase of the building plot, we won’t have saved enough equity so that we won’t need to mortgage the plot. Assuming we repay the KfW loan: 170k land charge - 85k remaining debt = 85k could be taken up again. The plot will probably cost around 120k€ (+additional costs). In 6 months, we will never manage to save the missing money.

Unfortunately, I fear that by the planned plot purchase we will not have saved enough equity to avoid having to mortgage the plot.

Well then, good luck with the banks. I couldn't get a loan for just the land. Everyone turned me down. So you’d have to do it as part of the house financing package. That means planning well and running everything in a coordinated manner.
It’s best to go to your house bank and get a financing commitment. That way, you’ll at least know if the financing framework is feasible.
Or consider other bridge financing options, parents, siblings, etc., so they can cover the missing amount between the land purchase and apartment sale in advance.

With a combined 5k net income, you could set aside 2k per month, at least for a limited period.

We ourselves only found 2 banks that were even willing to finance an empty plot without [Grundstück]. When we then went through an intermediary, the selection was huge and the terms significantly better.

Well then, have fun with the banks. I didn't get a loan for just Gst. Everyone turned me down. So you would have to do it as part of the package with the home financing. That means planning well and running everything on a tight schedule.

It's always just a question of the amount of the loan, the time horizon, and the conditions

With a total of 5k net, one could set aside 2k per month, at least over a limited period

Yes. This amount is being saved, sometimes even a bit more. Still, it probably won't work out. I'll just let myself be surprised and wait to see exactly when the municipality sells the building plots and for how much exactly. Maybe you can reserve the property bindingly for a few months.