Financing detached single-family house (new construction)

Hello,

we are planning the construction of a new single-family house in a good to very good location in BY.

Here are the key data:

Land costs including additional costs: 240,000,- (already paid)
Construction costs: 630,000,- EUR
Additional equity: 30,000,- EUR

Financing requirement: 600,000,- EUR

We have the following offer with 3 components from the house bank.

Component 1:
Building savings contract with pre-financing ([LBS-W4 X30])
Loan amount: 300,000,- EUR
Term until full repayment: 24 years + 11 months

Savings rate: 1014 EUR (10 years + 7 months)
Interest on financing amount: 322.50 EUR (nominal interest rate 1.29% / 10 years + 7 months)
Repayment rate after allocation: 1200 EUR (nominal interest rate 2.25% / 14 years + 4 months)
Total costs: 75,683.09 EUR
Effective annual interest rate: 1.98%

Component 2:
Annuitized loan (house bank)
Loan amount: 200,000,- EUR
Nominal interest rate: 1.5% (fixed for 10 years)
Repayment rate: 583.34 EUR

Component 3:
Annuitized loan (insurance)
Loan amount: 100,000,- EUR
Nominal interest rate: 1.9% (fixed for 20 years)
Repayment rate: 325,- EUR

What do you think specifically about component 1 (building savings contract)? Personally, I like it at first glance because you get an interest rate of 1.98% for 25 years fixed interest. Mathematically, I even come to an interest rate of about 1.88% if I calculate the total costs of 75,000 EUR with the loan amount of 300,000 EUR spread over 25 years.
I would possibly cancel component 2 (10 years) and shift it into component 3 (20 years). In my opinion, this makes more sense in the current low interest rate phase and also increases planning security.

Are the offered conditions okay so far? Generally, interest rates have fallen a bit again in recent weeks.

I look forward to your feedback!

I am not a fan of these building savings products at all. Hidden costs, hardly calculable effective interest rates, and inflexible handling. Hardly anyone who concludes this understands the instrument down to the last detail. Still, at first glance (without recalculating) it looks quite reasonable and seems to be a real option for you.

Regarding the rest: Too many components with different terms. A large amount with a short term and a smaller amount with a long term doesn't really make sense. How about combining the two with a fixed interest period of 15 years? 20 years is often significantly worse.

And a personal note: For an equity quota of 71%, I don't find the loan interest rate outstanding. Not really bad, but not impressive either.

Also find too many components with different terms. Trapped at the bank / group for years because in follow-up financing there will be ranking problems with the assignment of the mortgage. Have a broker offer you a totally ordinary loan with a fixed term of 15-20 years.

Thank you very much for the initial feedback!

We have now removed the component with the 20 years and redistributed the sum as follows:

450 TEUR to the building savings contract
150 TEUR for a 10-year annuity loan

Reasoning: I find the building savings contract very interesting in terms of conditions, as a large part of the financing amount is secured over the entire term (approx. 25 years) at an effective interest rate of 1.88%.

The remaining 150 TEUR is somewhat more risk-taking over 10 years. The interest rate here is 1.5%, which is rather average, as this loan is also in second lien. I would then repay this loan as quickly as possible through possible special repayments. But even if a high remaining debt should still exist after 10 years, the risk of a significant interest rate increase is fairly cushioned.

Are the considerations understandable so far and, from your point of view, reasonable?

We have the same amount: 20y full repayment 400k at 1.69 and 200k at 1.33 for 10y fixed period. We found a balanced mix

We have the same amount: 20-year full repayment 400k at 1.69 and 200k at 1.33 on 10-year fixed interest. We found it a balanced mix

But it's also a pretty nasty interest rate. It has been significantly better before.