Financing question for our construction project

off topic: Those who are currently refinancing will probably stone me for this statement: To call a 15-year financing with an interest rate of 1.98% expensive – this only makes me shake my head. :rolleyes:

I got 1.92% effective for 20 years :) we hit the absolute downside. and I barely messed up the 80% loan-to-value ratio, actually 1.72% would have been possible :) well, I’m not complaining when I look at the current interest rates.


why should the 50,000 be due in 10 years? he can just refinance it.

Guys, guys... I have already considered that the 50,000 are due if I don’t repay anything early! That’s why we will keep a close eye on the interest rates in 3-4 years to evaluate the refinancing. Since I don’t believe that the interest rates on the open market will go down any further, I will probably start repaying the KFW loan early. I’m not whining about the missed low point but happy because I concluded my last real estate loan at 4.7%... People just always want more (or in this case, less interest).

I got 1.92% effective for 20 years :) we hit the absolute low point. and I barely messed up the 80% loan-to-value ratio, actually 1.72% would have been possible :) well, I'm not complaining when I look at the current interest rates.

We also just missed the 80%, but got 1.84% with a 30-year fixed interest period, as the most expensive component :)

why should the 50,000 be due in 10 years? he can continue to finance it.

As I understood it, the KfW is a 10/10/10. That means 10 years term with 10 years repayment deferral and 10 years fixed interest rate. This means the loan is initially due. To what extent and under which conditions he can then extend the loan (whether a 10/10/10 at the KfW will be extended at all) or possibly finance it with a new bank – remains to be seen.

By then, (without special repayments) €85K of the large loan should be paid off. That means with a construction sum of €470K, there are still outstanding debts of €105K + €50K. I am not a banker, but any bank should be able to finance that even in second rank.

The construction company gave us the tip to arrange multiple financings. Their example:

50,000€ (or what you put into the installment) over 10 years (back then about 1% interest) in full repayment
50,000 KfW over 10 years in full repayment
Remaining amount over as long as possible (e.g., 20 years) with 0% repayment and interest only

After 10 years, then increase the long-term loan and start there

Advantages:
- KfW is off the table, no refinancing of the small amounts (usually about ~~~30,000 after 10 years)
- You have part of the financing at a super low interest rate off the table, without the short fixed interest period being relevant (basically it would be another "KfW financing")

Of course, this only works if you conclude everything with one bank. The construction company said that you could do it at Haspa Hamburg. We didn’t follow up because we forgot in the hustle and bustle. It is definitely a calculation idea!

If the 0% financing is not possible or only possible at a high cost, reduce the amount of the quick financing and set the large loan to 1% repayment. However, the actual effect is lost then. The more money in the small quick loan, the cheaper it ends up being (and the higher the installment).