Financing used property

Hello Forum,

as a lurker I have already learned a lot and read all kinds of financing options, now I have a concrete question myself: up to 47, two children, job in the public service, wife civil servant. Net income both monthly 4800.-

We are considering buying a used semi-detached house; should cost 255,000. Equity is 70,000.
So including incidental costs loan amount of 205,000. I have a few offers to which I would like to hear the opinions of more experienced people:

Bank 1: two loans: 1) annuity loan of 155,000, fixed interest for 10 years, effective interest 2.81%, 3% repayment, 5% special repayment p.a. 2) Landesbank loan 50,000 EUR, fixed interest for 10 years, effective interest 2.58%. Makes a monthly burden of about 950.- EUR.

Bank 2: three loans: 1) annuity loan of 105,000, fixed interest for 15 years, effective interest 3.45%, 3% repayment, 5% special repayment p.a.; 2) annuity loan of 50,000, fixed interest for 10 years, effective interest 3.02%, 3% repayment, 5% special repayment p.a. 3) Landesbank loan 50,000 EUR, fixed interest for 10 years, effective interest 2.58%. Makes a monthly burden of about 1000.- EUR.

The splitting doesn’t seem uncommon, but I am not sure whether you should not increase the installment amount to, say, 1200.- - on the other hand, now possibly more money would remain for special repayment. My wife is currently working only part-time due to the children anyway, that could be changed if more money should be needed.

Thanks in advance for your opinions,



[TD="width: 86"]

Why not an annuity loan over 20 years? 10 years is rather unwise in the current interest rate situation if you do not intend to have paid off the majority after 10 years.

Hello,

both models are no good! If you want to refinance a part with a bank change, you will get problems! These would have to be registered as subordinated in the land register!

- I advise you max 2 components; annuity + KFW.
- Special repayment right
- With the interest rate level, choose a fixed interest period of at least 15 - 20 years

By the way, you have a Baugesetzbuch 389 right to terminate the contract after 10.5 years without prepayment penalty.

I am 47, z
two children,
job in the public sector,
wife civil servant. N
net monthly income both 4800.-

So including incidental costs loan amount of 205,000.

Bank 1: two loans: 1) annuity loan over 155,000, fixed interest rate 10 years, effective interest rate 2.81%, 3% repayment, 5% special repayment p.a. 2) state bank loan 50,000 EUR, fixed interest rate 10 years, effective interest rate 2.58%. Results in a monthly burden of approx. 950.- EUR.

Bank 2: three loans: 1) annuity loan over 105,000, fixed interest rate 15 years, effective interest rate 3.45%, 3% repayment, 5% special repayment p.a.; 2) annuity loan over 50,000, fixed interest rate 10 years, effective interest rate 3.02%, 3% repayment, 5% special repayment p.a. 3) state bank loan 50,000 EUR, fixed interest rate 10 years, effective interest rate 2.58%. Results in a monthly burden of approx. 1000.- EUR.

The split does not seem to be uncommon, but I am not sure whether to increase the installment amount to, say, 1200.- – on the other hand, more money might be left for special repayments now. My wife is currently working part-time anyway due to children, that could be changed if more money were needed.

Three points that stand out to me.

1. Did you forget to state the repayment for the state loan? If not, after 10 years you have to repay 50,000 or presumably refinance it at probably worse interest rates.
2. As already mentioned here, you should increase the fixed interest period to at least 15 years (if possible in general). This will secure the currently favorable interest rate for the long term and provide higher planning security.
3. You are 47 years old and possibly currently (or generally) the main earner. When do you want to be finished with repayment? At retirement? Then you must increase the repayment, because otherwise you will still have a nice monthly amount to pay off at retirement (unless you have firmly planned special repayments).
If the state loan is actually bullet repayment, this would really hit you. Because then you would have to start paying off the 50,000 amount at age 57.

Regarding the state loan, you might consider the KFW 124 (home ownership) as an alternative. With 10 years fixed interest period (maximum) the interest rate is 2.65% (20 years term). I have excluded the 35 years term and 10 years term (without repayment) immediately. The disadvantage of KFW 124, however, is that you cannot make special repayments within the fixed interest period (except for full repayment with prepayment penalty).

A bit more about your purchase price – renovations/refurbishment work might still be necessary on the property. If so – that also costs money and should possibly be planned directly – perhaps also drawing on KfW programs here.

So long for now – lunch break over :(.

... but I’m not sure whether the installment amount shouldn’t be increased to, say, 1,200.- – on the other hand, more money might be left for the special repayment now.

Hi,

according to a rule of thumb that you often read here, with the current interest rate level, 500 € per 100,000 € loan amount should be available as an installment. That would be 1,275 € in your case. ;)

But you are making appropriate repayments, so an installment of 950 € would also be fine. The remaining debt in both variants after 10 years is about 140,000 €, which you can also handle with 10% interest (the installment would then be the 1,275 €).

Whether you repay more now (installment of 1,200 €) or make special repayments with the same amount actually makes no difference. With the special repayment, you’re more flexible throughout the year, whereas with a higher installment you have the security that the money is really used for the financing and not for something else. ;)

Of the two variants, I would choose the first one because the remaining debt is somewhat lower and overall fewer interest payments are made; in addition, you don’t have the refinancing issue with the first variant.

@HilfeHilfe

Whether it’s KfW or Landesbank doesn’t matter, in our case the promotional loans of the Landesbank are even KfW loans, just at a reduced rate.

Regarding the fixed interest period: You shouldn’t generalize but always calculate through.

If I now calculate the large loan from variant I with 15 years fixed interest (i.e. interest rate 3.45%), I would have paid 10,000 € more in interest and repaid 10,000 € less than with 10 years fixed interest (2.81%). Then the question is how the follow-up financing would look with 10 years fixed interest. If the interest for 5 years fixed interest were to “only” double (5.62%), you would still be better off with variant I, that is 10 instead of 15 years fixed interest. ;)

@backbone

True! Completely agree with the state loans.

With 10 or 15 years and the interest burden, I'm with you. But one should ask oneself whether one can afford the higher repayment and properly pay down the partial loan within 10 years. With 2% repayment, the total duration is 30 years. The interest risk at refinancing weighs more than choosing 15 years right from the start.

Basically, you should not only inquire with your house bank but also with the usual brokers, Interhyp Dr. Klein etc. Many here have had good experiences with Interhyp.