Finance construction project, total costs: €395,000

In the current market situation, one should definitely try to achieve an annuity of ~5%.

Those who do not succeed have a good starting point to reflect on why they are not succeeding. Regardless of feasibility.

Likewise, it is more than sensible for the financing to be calculatively completed before retirement without major acrobatics (such as inheritance in 20 years or the so very large salary jumps).

Any special repayment is then rather positive and one can be happy; but basing financing over 30 years on that or on salary jumps?

And if the entire financing can be arranged with a möglichst langen Zinsbindung or a concept without or with very little interest rate risk, one is on a good path.

However, if for whatever reasons one leaves this tension field, one should take a moment longer to reflect on the situation and the project and be aware of the risks.

Feasibility is not everything.

The feasibility – also related to the goals and wishes with which everything begins – is the basis for all decisions and further procedures.

Not infrequently, clients and property buyers are able to deal with the topic professionally for the first time when examining feasibility. From my point of view, a decision can only mature when, based on as independent advice as possible, one has professionally been shown the logic of financing mathematics, the interest rate risks, terms, the relationship between interest and repayment, the cost structure of the project, and the hazards to be considered, or these have been discussed together.

Such an examination of feasibility can thus present numbers and data that make it easier for the consumer to completely or partially withdraw from the project or make corrections.

It is also important for me to mention that it is only possible in this way to get to know the consumer and their initial situation individually in order to make a recommendation regarding the meaningfulness of the project with the best knowledge and conscience.

One cannot and must not make general judgments or offer assistance here if it is to be sustainable, and everyone also knows that advice is not the same as advice, because one bank may decide one way, another bank differently, one bank advises through its advisor one way, and the other bank another way.

The very different lending criteria of the banks, the whims of bankers, and also their expertise sometimes really make it difficult to understand where one actually stands, what is best for oneself, and how the concepts can still be improved individually.

When I completed my construction financing with around 3% interest in 2012/2013, the same reference point of 5% annuity applied to be paid off in about 30 years. With 2% interest, however, an annuity of 4.3-4.4% is enough to be finished in 30 years. At 1.5%, an annuity of just over 4% is sufficient.

Just as the rule must be adjusted for high interest rates, it is not valid indefinitely downward. As a first reference point, the rule can certainly be used, but not as an exclusion criterion.

Exactly, as high as possible, and 2% can be completely sufficient there.

Banks currently require 2%. Those who can pay less are practically distressed.

The higher the interest rate, the shorter the term will be with the same repayment.

No, that’s not true. The Ing.Ing-Diba (whose ads always fly around the text here) accepts 1% and the DSL Bank 1.5%, and the two are currently – rightly so, DSL Bank – fishing away a whole lot of construction financing from the market.

Whether it makes sense, how sensible that is, is another matter, but my numbers are a fact!