Financing decision experiences

... what do you pay in interest period 1? 1900 euros installment for the loan and how much as a deposit for the building savings contract?

... what are you paying in interest period 1? 1900 euros installment for the loan and how much as a contribution for the building savings contract?

The installment for the building savings contract would have been included there. I think it was about half. But we didn't accept the offer, in the end we went with the 20-year annuity loan.

Congratulations on the financing! Just wanted to point out that 10 years is not a bad idea. We also debated back and forth and just concluded a 10-year deal at 2.02 percent (applied for 2.5 weeks ago).

Six weeks ago, hardly anyone advised against 10 years. Currently, everyone thinks they know better again. ;-)

In my opinion, no one seriously knows what will happen in 10 years. Whether the ECB will really raise interest rates that much given the overall situation regarding debt, especially in southern regions, is also very doubtful.

As an exit strategy if things really go bad, I still see the option of special repayments and also doing a forward before maturity.

I agree with you. It’s basically looking into a crystal ball. Besides, you must not forget that the loan amount decreases over 10 years and the value is likely to increase. This increases the equity ratio. Last year, we also closed a 10-year deal at 0.96% with about 30% equity ratio (land). I strongly assume that after 10 years we will have an equity ratio of about 60-70%, and then the interest rate will still be affordable.

I agree with you. It’s basically looking into a crystal ball. Also, one must not forget that the loan amount decreases over 10 years and the value will probably increase. This increases the equity ratio. Last year, we also took out a 10-year loan at 0.96% with about 30% equity ratio (land). I strongly assume that after 10 years we will have about 60-70% equity ratio and the interest rate will still be affordable.

Well, appreciation / depreciation is just as uncertain in advance as interest rates. Anything can happen, nothing must. Two years ago, hardly anyone would have expected 7% inflation and a war of aggression against Ukraine. This has nothing to do with "everyone knows better," as someone wrote further up, but simply with different personal attitudes towards risk. There are solid arguments for both options, both options are legitimate. Someone who is not willing to take an interest rate risk in the future fully hedges themselves today and accepts additional costs for it. I wouldn’t even say that you only know after 10/15 years "whether it was worth it," because maybe it is already worth it by allowing the risk-averse person to sleep better at night knowing they know the worst case.

Well, appreciation / loss in value is just as unknown in advance as interest rates. Everything is possible, nothing is certain. Two years ago, hardly anyone would have expected 7% inflation and a war of aggression against Ukraine. This has nothing to do with "everyone knows better," as someone wrote further up, but simply with different personal attitudes toward risk. There are valid arguments for both variants, both are legitimate. Someone who is not willing to take an interest rate risk in the future fully hedges today and accepts additional costs for it. I wouldn't even say you only know after 10/15 years "whether it was worth it," because maybe it's already worth it in that the risk-averse person can sleep better at night knowing the worst case is known.

I believe that due to the new government and the shortage of materials, the supply of single-family homes will decrease. The construction industry will have a very hard time soon. Sure, it’s like religion when it comes to belief, but in my opinion, the likelihood of value increases is higher than that prices will plummet. We are talking about outskirts and not houses in big cities where the price is slowly reaching its peak (in my opinion). And if the value stagnates, then after 10 years you have paid off a financing sum x and the equity ratio increases.

If we assume the worst case, Russia could also drop a nuclear bomb on Berlin, then the value, even 50km away from Berlin, would fall to zero.

The future is clearly uncertain, so one can only work with assumptions/probabilities.

The rate for the building savings contract would have been included there. I think it was about half.

Then during interest period 1, the main loan wouldn't have been paid off that much. That's exactly why I'm asking, because I find your Excel excerpt a bit unclear. Thanks for the information.