Financing offer for a solid house, loan 600K EUR

Dear forum,

I have been following here for some time and greatly enjoy the posts. I especially appreciate the exchange of experiences! In this context, I would like to get your opinion on our financing offer and situation. I am very happy to receive feedback!

We, that is my wife and I (no children) are 32 and 31 years old. My income is currently 4,200 euros net (doctor in hospital). My wife works in administration and currently earns 2,400 euros net. Together we have a net income of 6,600 euros. Furthermore, I have already received a plot of land valued at 290,000 euros from my grandparents. It is developed and can be built on with a single-family house (no additional costs such as notary fees, etc.). This is exactly the house we want to build now.

Our plans and ideas are:

Solid house
Loan amount 600,000 euros
Costs for house construction 480,000 euros
Remaining 120,000 euros for incidental building costs and "buffer."
Equity capital still 40,000 euros.

Offer from the bank: 600,000 euros for 10 years fixed interest at 0.5% (effective) or 15 years fixed interest at 0.8% (effective).
The monthly rate should be 1,600 euros plus operating costs of the house. There are no other obligations.
The loan is to be repaid over 35 years, with special repayments planned to "save" 6-8 years and also increase the loan rate slightly, so that we finish after max. 30 years. Furthermore, I will receive another house in the form of a gift within the next 20 years.

May I kindly ask you to give an objective opinion on the above "project." Thank you very much for your feedback.

Best regards and have a great Sunday
Marian

I would rather lean towards the 20-year term with such a large loan amount – especially with life insurers, you currently get excellent conditions (DEVK, Allianz, etc.).

Has gift/inheritance tax already been taken into account? 290K€ exceeds the exemption limits. There could still be 10K€ in taxes hidden there.

The 120K€ ancillary construction costs and "buffer" will need to be justified to the bank if they are not to negatively affect the loan collateral value. Do you have a breakdown of the costs included in that?

The repayment is quite low for the loan amount. Accordingly, the outstanding balance after 10 years (433K€) and 15 years (370K€) is high, and that despite the high income. I would revisit this and/or consider a longer-term commitment. It's incredible how low the interest rates are, even compared to the previous all-time low two years ago. Maybe multiple batches with different terms would also be an option for you?
Given the financial circumstances, I would not enter into financing with a (fictional) term over 30 years. Even at the beginning of your 30s not.

In any case, the conditions are good.

The interest rates are so low because the 290k from the land is considered equity. If the bank accepts the low monthly installments, you have to be clear that either special repayments are necessary, or you won't finish, maybe intentionally?

Thank you very much for the contributions so far.

Indeed, special repayments are planned. The installment is also to be adjusted to 2,000 euros after 3-4 years. We just want to go slower at the beginning. We also have an offer for a 20-year fixed interest rate. This is 1.2%. We are actually leaning towards this. If interest rates continue to fall after 10 years, we could terminate the loan according to legal regulations and refinance.

Thank you very much for the input so far!

The interest rates are so low because the 290k from the property is considered equity.

That is a usual condition for <80% financing. With 60% you currently get 10 years at 0.3%.

The 10-year federal bond currently yields -0.688%. Even 30-year federal bonds now have negative yields. Maybe we will experience, as in Denmark, that there will soon be negative interest rates on mortgage loans.