Financing offer - What do you think?

Hello Diamond,
I'll jump in briefly here.
You already know our background, and we have now also spoken with another advisor who doesn’t think much of the combo packages at all, the exact quote here would be censored ;)
He wanted to sell us a 20-year annuity loan. The interest rate would be 3.1-3.2%. I calculated it myself with the same rate we would have to pay. Although with the building society savings plan, we have 2*40€ advance payments included. To be done in the same time and with the same rates, the follow-up interest rate must not exceed 2.92%. That means it would have to be below the current interest rate.
I don’t have a crystal ball, but I do have enough justified doubts that this will be the case.
My calculation when comparing is quite simple: The rate is fixed, the offer where I am finished sooner is better ;)
However, the advisor from the company whose offer you have said that it only applies up to 100,000€.

One more question to Musketier: Admittedly, I haven’t fully calculated it yet, but I don’t quite understand why the advantage shifts towards annuity loans with regular special repayments. Sure, the closing fee of the BS weighs more heavily, but on the other hand, you save even more interest and so on.

Regards, Jake

Because with the [Konstantdarlehen] there is no repayment in the first 12 years. You can only make special repayments after 12 years. With the [Annuitätendarlehen], for example, you can make a regular special repayment in year 5 and thus a) pay less interest and compound interest and b) the repayment portion simultaneously increases directly with the saved interest; the effect is therefore exponential, so that even small but early special repayments have a very significant impact in the end! Due to the lower interest rate for the [BS], special repayments (after year 12) are not as efficient.

Hello Saruss, thanks for your response, but that is not correct at all. We are currently planning something similar with almost the same volume, also have a fixed loan in mind and can repay 10% p.a. through special repayments in the first years, that is before allocation. Regards, Jake

I find it quite unusual that you are actually allowed to reduce the debt on the fixed loan earlier (then it is no longer a fixed loan at all). Are you really sure that the "Sondertilgungen" do not instead go into the balance pot? In BV, the conditions are usually fixed and you can't just deviate from them like that (e.g. minimum/maximum balance in the BV).

The edit button is missing: Nevertheless, with the same special repayments, one still benefits from the compound interest advantage with an annuity loan due to a higher repayment rate after the special repayment, which is lost with the constant loan. However, if the interest rates are really incredibly low for constant loans over such long periods, the final result still counts: which loan is paid off faster in the end with fewer payments / with the same payment. Special repayments are often only hypothetical at first; one doesn't really know if one can actually afford them... and for that, one can usually adjust the monthly rate anyway.

Hello Saruss, in the case of an inheritance or similar, it can even be completely paid off after 5 years after full payout, otherwise we have 10% p.a.. It is true that the rate does not decrease and thus you cannot save more, for example for new additional repayments, but in the first years you always pay the interest on the entire loan anyway, so it probably balances out again. I also have a thread about this in this forum. I am still looking for the error in the loan principle, but I can't find one. What I probably have calculated: if the interest rates were above 3%, then it would no longer be worthwhile. But ours are 2.6% and I just can’t find a cheaper one, as much as I want. The fact that other advisors we contacted to find better conditions do not get back to us strengthens our belief in that.