Financing a New House: Is Mortgage Swap Sensible or Not?

Hello everyone,

we are currently in the process of buying a new house and selling our current house. I would appreciate tips on the topic of financing.

The starting situation is as follows:

The new house will cost €300,000 + additional costs (approx. €50,000).

The financing for our current house is split into 2 parts. Part 1: Annuity loan. €140,000 disbursed in 2015, fixed interest rate for 15 years at 2.5%, installment €630 Part 2: Building loan TA loan €60,000 disbursed in 2015, term approx. 23 years at 1.8%, installment €250

We still have an outstanding debt on the annuity loan of approx. €120,000. I am not 100% sure about the TA-building loan right now.

In summary: Outstanding debt total approx. €170k

Our current house will bring a proceeds of €300-350k. A large part of the "profit" will then flow into the new financing. Here I would rather conservatively calculate only €100k "profit."

That means Rest debt old financing €170,000 New financing €350,000 Equity for new financing (profit from house sale) €100,000 So a financing gap of approx. €80,000

What would be the best alternative here? Debt swap of the existing loans onto the new house + additional financing €80,000? Cancel old loans and pay prepayment penalty and completely refinance? Completely different option?

I find it difficult to calculate whether it makes sense to pay the prepayment penalty and refinance with a significantly better interest rate. How is the best way to calculate this?

Thanks in advance for the tips!!

What would be the best alternative here?

That really has to be calculated individually.

Here I would cautiously reckon with only €100k "profit".

Why so cautious? If the current house brings in €350k, for example, you have no financing gap at all.
I would first ask the bank about the mortgage swap or the amount of the VE. Then ask about a variable interim financing for the sales proceeds. Depending on the amount, the rest can then be transferred into a fixed financing.

With that, you can continue planning. Maybe you can sell the new house quickly as well, so that both transactions can run simultaneously.

Thank you for the response.

I am rather cautious because we simply cannot yet estimate how high the proceeds will be. We have a quite "special" house, where we have to wait and see what happens. Therefore, we approach the matter more pessimistically.

I will inquire about the VE. The variable bridging finance is already in place.

You have to have that calculated. Just move Excel a bit. [Pfandtausch] is not for free either...

When selling, you have a legitimate interest; the bank must then let you out. (§490 Baugesetzbuch)