Experience with financing transactions?

Hello everyone,

I need your expert advice, as I don’t have much experience with financing deals myself! :)

So, the framework:

I (25) want to build a small bungalow, no basement, no attic conversion, no garage, just a small bungalow with about 90sqm of living space.

Costs 140,000
Equity: 30,000

Loan amount: 110,000
Monthly affordable rate: 900€

Hm What else do you need?? :)

Wfa (possible only next year), KFW would already be possible now, just asking if it makes sense since the interest rates are currently so low that KFW hardly pays off, especially because of the grace year.

My question:
Should I go with or without KFW and take the rest simply as an annuity loan from the cheapest bank, or do you have another suggestion?

I received 2 proposals from an independent financial advisor, what do you think about them??

1: 2 KFW loans (50,000 - 2.85% and 35,000 - 2.95%) term 15 years, fixed interest 10 years, repayment 5.8%. Remaining debt about 20,000 and 14,000. One with special repayment, the other without! Then another 25,000 from a different bank as an annuity loan with 3.52% interest and 8.5% repayment, fixed interest 10 years, no remaining debt.

or

2: Without KFW:

60,000 with 3.19% interest and 8.5% repayment and 50,000 with 2.85% interest and 4% repayment. Both 10 years fixed interest. The 50,000 has 1 year repayment-free... The term would be 20 years.

I actually think the term of 20 years is nonsense because I think that with a monthly rate of just under 1,000€ I could be finished in about 10 years.

So those are the two offers, I hope you can help me, since I don’t have much idea about this myself :/

Best regards

riGo

Hello riGo,

here is briefly my opinion on the 2 financing options.

regarding 1.)

in my opinion, this does not work at all because the KfW provides a maximum of €50,000 per financing. If it does, the costs for the 3 loans would amount to €866.05 per month during the fixed interest period. The terms would be 14 years each for the 2 KfW loans and 10 years for the 3rd loan.

regarding 2.)

you write "without KfW," although the €50,000 with 2.85% interest and one year without repayment already looks very much like KfW.
The €60,000 costs you €584.53 per month and is paid off after 10 years.
The €50,000 costs you €285.42 per month and would be repaid after 19 years at the same interest rate. Total costs during the interest period monthly -> €869.95.

I think you could live quite well with 1.) if it works with 2 times KfW.
For 2.) it should be said that after the 1st fixed interest period you are already done with the €60,000, and you could use the €584.53 monthly to repay the €50,000. My suggestion would be to already pay into a building savings contract during the 1st fixed interest period (e.g., vermögenswirksame Leistungen) in order to repay the €50,000 loan after 10 years with the building savings contract and then "only" have to repay the capital from the building savings contract.