Financing offer - What do you think?

All horses back, it is of course actually a constant loan, i.e. financing with a building savings contract. Unfortunately, the good advisor did not utter a single tiny word about it. Accordingly, she clearly lost her commission. Nevertheless, I really can’t find anything financially disadvantageous about the offer. The fact is that no one can offer us a pure annuity loan that comes close to this. Even when I include the closing fees and the slightly worse interest rate after the building saver’s allocation, I don’t get cheaper. To be finished in a similar period, we would have to calculate at least €150 more per month with an annuity loan. Over 25 years, that is quite a bit. I have now read a lot about the pros and cons. 1. You pay interest on the preliminary loan for the entire term on the full amount. That is 2.37% (effective interest rate) on 230,000 for about 12 years. 2. You may have to pay tax on the interest income from the building savings balance. Last year this was about €425 for us, well below the exemption limit of €1,600. We never fully exploit that. 3. Closing costs for the building saver, 1% or 1.6% of the total amount. 4. Basically, the allocation of the building saver can be postponed if the building society does not pay out immediately. That is the principle, if everyone calls at once, not everyone can get the payout immediately. However, BHW guarantees the loan interest rate until allocation, not for a fixed term. So in my opinion, this has no impact if the allocation happens later. Or am I mistaken? 5. My only real problem: The building savings loan can possibly be rejected in 12 years if BHW no longer considers you creditworthy. I don’t know what would lead to that, but I also don’t have a crystal ball. And what then? Then I have the credit in the building saver, but no fixed interest rate anymore. That is probably extremely rare but well. The question is, would BHW possibly have an interest in not granting the loan? Can they just do that? So, what do you say? Still okay or further catches or problems? When this topic is finally over... phew

I calculated it the other way around and quickly created a table comparing the data, as far as you provided it. Since your link doesn’t work, as a comparative value (the interest rate on the balance was missing, so I assumed a realistic value) according to my calculation after 12 years of fixed loan: you have paid in 173k euros but paid 64k euros in interest and saved a balance of about 113k euros, so there are still about 119k euros left, which will then be repaid just like an annuity loan at 2.3%; with a constant rate, this is repaid after about the 21.3rd total year (taking into account 1% commission). I then compared it with a complete annuity loan of 230,000 euros, and from an interest rate of 2.9% you would be finished just as quickly. That means if you get an annuity loan with less than 2.9% interest, overall it is the better choice. The remaining debt after 20 years is very low, by the way, so I would try to get prices for annuity loans with a 20-year fixed interest rate - at 2.8% it is already cheaper than the fixed loan. By the way, you also have a special right of termination after 10 years, as far as I remember (in case - very unlikely - there were better conditions then).

I wasn’t far off with my question ;)

As Saruss has already pointed out, a few more details are still missing for the exact calculation.

However, I think Saruss made a calculation error. I think Saruss calculated with a rate of €1210.
Since the KFW loan applies in both variants, I would exclude the KFW loan from the comparison calculation and only calculate with the rate of €1035.

Of the €1035, in your calculation €440.83 goes as interest on the loan and €594.17 as savings rate into the building society savings contract.
After 12 years, you have about €91k in the building society savings contract at 1% interest (about 40%). (I assume the credit interest rate is slightly lower.) The remaining €139k would be repaid after another 13 years at an interest rate of 2.3% and a rate of €1035.

To repay an annuity loan in 25 years, you need an interest rate of no more than 2.52% with a rate of €1035.
That would already be very favorable for a 25-year fixed interest period. With a shorter fixed interest period, the interest rate could be achieved, but you then have the interest rate risk.

Contrary to my personal position on the topic of the building society combo, I have to admit that the conditions of the fixed loan do not sound bad.

However, one should note:
If one assumes regular special repayments, the advantage gradually shifts towards the annuity loan. With an annual special repayment of €5000 at year-end, the annuity loan would be cheaper than your offer from the building society at an interest rate below 2.82%.

Hi, I actually calculated with 1210, the change of one number in my table now results in the same values as yours, then the 25 years also fits. I only come to 2.63% for the annuity loan for equivalence, did you also consider the BV commission, which is due AT THE BEGINNING (=2.3k advantage with annuity or 2.3k more loan with BV)? I am also not a fan of building savings, especially because of the allocation, the fixed loan can still deteriorate significantly in the overall package - if the allocation is delayed by 2 years, that would mean paying interest on the entire loan for 2 more years. Otherwise, the conditions overall look acceptable, definitely regarding security.

I omitted the commission :) , as the exact consideration lacks the credit interest and planned special repayments.

Many thanks for your answers! Really great how you get help here in the forum :-)
The credit interest rate from the building savings contract is only 0.5%, of course anything but great.
So I’m assuming at least 3.2%, if not up to 3.5%, for the 25-year annuity loan. Unfortunately, our equity capital is anything but ample. Next Tuesday we have an appointment with another advisor who will offer us an annuity loan. I’ll definitely get back to you then and report what came of it.