Financing confirmation semi-detached house - Tariff I.O? Experiences?

Hello everyone,

we have a financing confirmation from my house bank for a 180m² semi-detached house in the postal code area 67xxx and cannot assess how good the rate is.

We are 32 and 29 years old and both have permanent jobs. Our joint monthly net income amounts to €3700.

The house still requires personal effort: - 2 bathrooms, although we initially only want to (have) do one of them. - Floors (partial personal effort?) - Painting work (personal effort) We are also missing a kitchen. The rest of the furniture is available.

Property price: €419,000 Equity: €100,000 Collateral: 20,000 I also have an additional €35,000 in stocks which I would like to leave untouched for now, as they are currently not doing so well.

As mentioned at the beginning, we have now requested financing from my house bank and were given two possible options:

Option 1: - Term 15 years - Financing amount: €369,000 - Nominal interest rate: 1.492% - Effective interest rate over the entire term: 1.51% - Repayment rate: 2.09% - Monthly burden €1,100 - Annual special repayment: €18,450

Option 2: - Term 10+10 (after 10 years there is the possibility to switch to better conditions or to continue the loan under the previous conditions for another 10 years) - Financing amount: €369,000 - Nominal interest rate: 1.76% - Effective interest rate over the entire term: 1.79% - Repayment rate: 2.01% - Monthly burden €1,150.23 - Annual special repayments: €18,450

We expect to set aside at least €500 per month for special repayments. This creates the possibility to have paid off Option 2 after the 20 years of fixed interest rate. We would also have a bit more flexibility if the €500 does not work out sometimes.

We are now also considering increasing the financing amount to €380,000 – simply to have more security.

I have also scheduled further consultation appointments with other banks. However, these are only next week. We hope that you can give a first assessment in advance as to whether we can get financing at better conditions.

Thank you very much

I cannot grasp the costs, what is the pure purchase price and what is the share of the modernizations?

100,000 Euro are to be deducted from the total costs and 20,000 Euro remain with you from the 100,000 Euro?

Do you have children because of state subsidies [Landesfördermittel]? Also, please specify another digit after 67xxx regarding the selection of regional banks.

Good morning,

thank you very much for your feedback.

The pure purchase price for the property amounts to €419,000. We have €120,000 in equity, of which we want to use €100,000 and keep €20,000 as a reserve. There are no children, but that is expected to change in the future.

On top of the €419,000 for the property come the bathrooms, the kitchen, floors, and painting work. Our advisor had therefore calculated €369,000 here. We now think that €10,000 more is more realistic.

ZIP code 670xx

Thank you for your effort.

Option 2: - Term 10+10 (After 10 years there is the possibility to switch to better conditions, or to continue the loan with the previous conditions for another 10 years)

I can terminate any loan after 10 years regardless of the term, right ? Have you asked your "financial advisor" about that?

Hello, how does the income change when there are children involved along with part-time work?

I think you are overestimating your income. You are paying a pure loan of 1,100 / 1,150, and still have to cover the interior finishing. Additional costs for the house will be around 350-400 €. That is 45% of your net income.

Then you possibly want to increase the loan???

You do realize that with 2% repayment there will be an immense residual debt after 15 years?

I can cancel any loan, regardless of the term, after 10 years, right ?
Have you ever asked your "financial advisor" about that?

Yes, of course, according to the Building Code 489 I can repay a loan with an interest fixation period longer than 10 years 10 years after full disbursement with a semi-annual notice period without prepayment penalty.

It is a 20-year condition, which has been described as a model with "10 + 10" in a way I have never heard before.