Financing offer: security option or rather tight constraints?

Ladies and Gentlemen, dear Diverse,

since many topics have come up here recently where the financing was described as very tight, I wanted to ask you about our financing offer, whether we are approaching it rather cautiously?

Offer:
Amount: €73,000
Interest: 1.30% for 15 years
Installment: €457.47
Special repayment option: 5% p.a.

If we use the full 15 years, we end up with zero residual debt. With the special repayment, we could be done after 9 years with annual use.

If we add another €5,000 of equity, then we are at €68,000 at 1.15% for 15 years, which would be an installment of around €417.
However, since we can only contribute the €5,000 in October (sale of plots), we want to leave this offer aside for now, but probably go with it later.

We would prefer a low installment (even lower than the current rent) to be able to put aside a good amount on the side, in case unforeseen things have to be done on the house and also in case one of us fails, so that one person alone can pay the installment. Net income for both of us is €3,900. We also do not want to put in more equity because we think that we probably won’t have that much money again for the time being and if there is really a big expense for the house, we could pay for it from that. (Buffer on the savings account is even higher than the contributed equity)

Our schedule is quite tight, though. In the third week of October, we have the notary appointment for the sale of the plots and three weeks later the notary appointment for the purchase of our house. So we would need the proceeds from the sale during this time frame. Does the financing have to be completed by the (purchase) notary appointment so that the land charge is registered? Or do they only register the land charge first and the financing is finalized later?

In the offer, we have a 6-month interest-free drawdown period. If we complete the financing in early November, we should pay the purchase price by the end of April 2020 at the latest. The problem is: we have a variable move-out date for the seller of the house, with a final deadline of June 30, 2020.
So there is a possibility that we would have to pay the purchase price when she is not even out yet and we cannot move into the house. Thus, we would have to start repaying the loan already without being able to move into the house or do anything on the house. (Definitely thought about this way too much, but overthinking is a hobby )

Should we still look around for financing offers or spare ourselves this stress and take this offer, because I don’t think we’re dependent on the absolute best interest rate at this amount?
Do you find this option too "safe" or should we go for a higher one (shorter fixed interest period, higher installment?) to be done even faster?

Somehow I had more questions in my head but they don’t come to mind at the moment. The fan on the desk must have blown them away.

Hope it’s clear and you want and can evaluate the offer and give feedback on my concerns/questions.

Until then

Tom

The post is not serious, are you?

Without going into everything now, there is a big missing piece for understanding. You sell plots of land (several) for 5T and buy a house for 73T + equity?

Save yourself the circus and the pointless fees; they will eat you up with that amount. A variable loan without fixed interest and without land charge. The fees saved alone make the interest rate completely irrelevant. Then you pay what you can and that's it. Or, if you want, a 5-year one. But definitely not 15 years with that amount.

Or did I misunderstand something?

PS: 3 weeks after the notary contract, you definitely won't have the money from the sale yet. 6-8 weeks would be rather fast.

Honestly? With the loan amount, it doesn't really matter what interest rate you end up with on the contract - unless your income is really tight. Please calculate 0.1% interest savings over one month. Those 5€ won't make much of a difference, especially since interest rates are historically low anyway.

Without going into everything now, there is a big missing piece for understanding. You sell plots of land (several) for 5T and buy a house for 73T + equity?

Maybe I should have explained more precisely: sale proceeds around €85,000, but we only want to add €5,000 of that as equity to reach the next interest rate bracket. The house costs €75,000 + €20,000 modernization planned. So far we are contributing €28,000 equity, after the sale we would increase it to €33,000. We don’t want more because we want to keep the rest of the money for now in case something major occurs at the house, bigger wishes come up, parents/grandparents need help, or simply to have money available for a sense of security.

We settled on 15 years because we don’t want any residual debt and a low monthly rate. Through special repayments you can (but don’t have to) be done earlier.

My question was also whether I should have the financing completed at the notary appointment of the purchase regarding the availability interest?

Sorry if this does not cover the usual sums here and I’m just wasting time as a small fry. For me it’s a big step to buy a house, even at this amount.

Maybe I should have explained more precisely: sales proceeds of around €85,000, of which we only want to add €5,000 as equity to reach the next interest rate bracket.
The house costs €75,000 + €20,000 in planned modernizations. So far we are contributing €28,000 in equity, after the sale we would increase that to €33,000. We don’t want to add more because we’d like to keep the rest of the money for now, in case something major comes up with the house, bigger wishes arise, parents/grandparents need help, or simply to have money available for peace of mind.

We settled on 15 years because we don’t want a residual debt and want a low rate. By making special repayments, one can (but doesn’t have to) be finished earlier.

My question was also whether I should have the financing finalized by the notary appointment for the purchase regarding the commitment fees?

Sorry if this does not cover the usual amounts here and I’m just wasting time as a small fry. For me, buying a house is a big step, even at this amount.

I suspect that might even be possible with half the income. Well, nobody knows your expenses. But you should be able to estimate rate + additional costs + living expenses against your income!

This is something you can pay off in 5 years, right, or are there €150k in modernizations hiding on the horizon?