Financing option - Assessment - New construction

Hello everyone,

I have been a silent reader in the forum for some time and now have a question for you.

We are currently planning our new build in southern Germany, which involves finding the right construction financing.

About us:
He, 28 years old, employed, net income: 3000€
She, 28 years old, civil servant, net income: 3000€
Children: None, but planned in the medium term.
Monthly expenses (currently rent-free): 2700€ all inclusive (private health insurance, utilities, hobbies...)

About the project:
Cost of new build with basement, including building plot, garage, outdoor facilities and incidental building costs: 725,000€
Equity used: 125,000€
Financing requirement: 600,000€

About the financing:
We are rather inexperienced regarding financing, which is why we feel significantly more comfortable with a certain interest rate security and ask for some leniency if any information is missing that might be necessary.
Planned monthly rate: 1800€ - 1900€

Currently, we have two offers:

Offer 1:
KFW 153 | 120,000€ | 0.75% interest | fixed interest period 10 years | monthly payment 383 €
KFW 124 | 100,000€ | 0.8% interest | fixed interest period 10 years | monthly payment 382 €
Annuity loan | 380,000€ | 1.25% interest | fixed interest period 30 years | monthly payment 1130 €

Offer 2:
KfW 153 | 120,000€ | 0.75% interest | fixed interest period 10 years | monthly payment 475 €
Annuity loan 1 | 250,000€ | 1.29% interest | fixed interest period 18 years | monthly payment 886 €
Annuity loan 2 | 230,000€ | 1.29% interest | fixed interest period 30 years | monthly payment 438 €

What is your assessment of the two offers?
As I said, we are somewhat inexperienced, so I find the comparison difficult.
Is one offer obviously better – or is it more a matter of personal preference whether to take the slightly better interest rate from Offer 1 but have a higher amount outstanding after 10 years that needs to be refinanced?

I am grateful for all assessments and feedback.

I am not a financing expert, so this is just a superficial inquiry from me: if children are planned in the medium term, how will your income change then? Is the care arranged in such a way that you can both quickly return to full-time work? Do you even want that? Is more than one child planned, and how will the care be arranged then? If both of you are not back to full-time work with all children after at most one year, I would immediately calculate in my mind with the lower income.

What does the remaining debt look like in each case? Basically, I would lean towards option two. But personally, the situation would be a bit too risky for me if there is a temporary loss of income.

The 1.25% for 30 years sounds almost too good to be true given the conditions. Where do they come from? If you can, I would take the KFW153 and €480,000 for 30 years at 1.25%. I believe the chance that a follow-up financing will be significantly cheaper than 1.25% is rather low.

Finding 600k with 6k net income is already rather ambitious with children planned. If corresponding income increases are to be expected, but it is manageable.

1.25% for 30 years with less than 20% equity is pretty good. I would then rather leave out the KFW 124, unless that is the reason why the 30 years are so cheap.

In principle, both offers are quite different and more a matter of taste than objectively clearly comparable. Basically, you should decide how much security you want and then obtain corresponding offers. If you want as much as possible for 30 years, then look for that and not pack in a large share with 10 or 15 years.

In general, I am not a fan of many components. KFW153 if you want to build energy-efficiently and then a complete loan for the rest I consider more sensible.

If children are planned in the medium term, how will your income change then?

But for me personally, the whole thing would be a bit too risky if there is a temporary loss of income.

That is a valuable hint. At the same time, by the end of your 20s you are usually quite far from the peak of salary development. Depending on how your career develops and what conditions it is based on now, an increase in income can easily compensate for the loss of part of an income due to a break or part-time work. That is definitely worth considering.

Nothing is certain anyway, we could drop dead tomorrow. From conversations with older people, I have gained the impression that you regret more what you didn’t do than what you did. If you fall flat on your face, you just get back up again. If you never even start, you experience nothing. Often it is good to turn up the inner voice a bit louder without switching off the head.

For me, all of this sounds quite doable. It’s probably a matter of personality.

I am an optimist and pity pessimists, since they allow themselves little anticipation.
My wife is a pessimist and pities optimists, since they are rarely positively surprised.

Does the health insurance still get deducted from your net income of 3000 Euros?

Best regards
Sabine