Financing at the house bank - Offer evaluation

Conclusion from the banker:
Finally, a well-structured financing across all positions (although one can of course consider whether the KfW/building society variant really has to be included – I don’t like building society contracts at all).

1. Cost calculation: comfortable with €3,500/sqm including incidental costs ( – no basement is being built, so all good)
2. Income situation: comfortable, at most a dry spell to bridge during parental leave / 40% loan costs of income also always means a good 60% for living expenses with a good income, so over €4,000 net that can be spent each month (which doesn’t happen though, otherwise no own equity would have been saved) / – €600 of the loan costs are costs for your own protection through an existing building society contract, so not an absolutely necessary component)
3. Whether you want to use a 5-year fixed interest period is exclusively a question of your interest rate forecast for the future. For us, the interest rate difference in refinancing is only 0.07% p.a., for example – so practically identical in the customer conditions compared to the 10-year condition. Rather consider whether to fix for 15 or 20 years – refinancing for the bank (except savings banks/cooperative banks) is also almost identical to the 10-year fixed interest period.

P.S. Due to the massively falling rates in the last two weeks (over 0.5% in the 10-year range), I would try to close promptly. What you have, you have.

Module 2: KfW300 as a bullet loan with LBS-Z35 home savings contract for counter-financing:

Don’t you earn way too much for the KfW300?

1. Cost calculation: comfortably at 3,500€/sqm incl. incidental costs ( - no basement is being built, so all good)

"Construction or purchase costs (incl. architect, structural engineer, Keller) 600k "

Conclusion from the banker: Finally a well-structured financing across all positions (although of course one can consider whether the KfW/building society variant is really necessary – I don’t like building savings contracts at all).

Thank you. That was also the aim of my question. I have the forum consensus "building savings contracts are useless" in mind and therefore wanted to hear your opinion on it.

1. Cost calculation: comfortable with €3,500/sqm including ancillary costs ( – no basement is being built, so all good)

Actually with a basement (unavoidable on the slope), but we are not building with a general contractor, but with family and a lot of personal effort. Exact calculation is still pending. The cost drivers are not the sqm, but the number of bathrooms, complex building structures, etc. However, we are not yet at the stage in planning to put a price tag on it.

P.S. Due to the massively falling rates in the last two weeks (over 0.5% in the 10-year range), I would try to close promptly. What you have, you have.

Thank you. Allegedly the plot will be buildable in June 2024. But I will only believe it when it happens. The allocation of the plots was also delayed by 2 years. We are worried that if we close now, we will encounter problems with the commitment interest and the repayment-free period. We are granted 2 years, which will be tight.

Don’t you earn way too much for the KfW300?

Not yet. In the assessment period, we earned even less. As I said, we only both took new jobs this year.

We have currently been offered 3.5 for 15 years with similar financing … find the 4 enormous. Today there was another drop of 0.1 percentage points compared to yesterday

I have the forum consensus "building savings contracts are useless" in mind and therefore wanted to hear your opinion on this.

I think the basic idea is "the KFW300 is so cheap that you repay as little as possible!"... But honestly, the concept with the building savings contract still doesn't really impress me.

The reason why it often doesn't pay off to replace a bullet loan with a building savings contract is that in the meantime you pay interest on the full amount of the bullet loan, and on the other hand the building savings contract’s interest is too low to compensate for that. With an annuity loan, you always pay the same amount, even though the loan principal decreases over time (meaning the interest portion decreases with each payment and the principal portion increases). With a bullet loan, you don’t have this compound interest effect, and the savings interest from the building savings contract does not compensate for it. Now, in your case, the interest rate on the bullet loan isn’t at 4% or something, so it doesn’t weigh as heavily as it would with a higher rate. Although I do wonder if it might be better to simply take the normal annuity variant of the KFW300 for that portion (which is even cheaper interest-wise) and, if in doubt, put some more into a higher repayment of the main loan. Probably the only way to know for sure is to set up an Excel spreadsheet yourself and play around a bit.

Otherwise, with a building savings contract you also buy a certain amount of interest rate security. But if I see that the larger loan was also calculated over 10 years and you are even considering financing part of it for just 5 years, then maybe you’re not exactly the target group for that? But I would be very cautious about the "part for 5 years" approach. With longer fixed interest terms, you have a special right to terminate after 10 years from full disbursement and are then basically quite flexible again—possibly to refinance, combine building blocks, or just continue running everything. After 5 years you don’t have that yet, and then you either have to hope that the bank’s prolongation offer (where you already are) is okay, or see if you can find a bank willing to go into second rank (and is the amount even large enough that another bank is willing to offer mortgage rates?). So yes, for the 5 years you might save something, and if you possibly expect to pay off that portion completely in 5 years, it would probably be worth it. But if you think that won’t work and you will have to continue financing that part? I don’t know, that wouldn’t be for me.

Otherwise, 4% for 10 years also seems high to me (since early November, interest rates seem to be slowly going down again), but I’m not deeply involved in it.