Financing with future payment

Hello everyone,

things are slowly getting serious for my husband and me regarding the financing.
Here are our rough details:

General information about you:

[*]How old are you? 31 & 28 married
[*]Do you have children? No
[*]Are children planned? Yes, in about 3 years
[*]What do you do professionally? Engineers
[*]How many hours do you work? Both full-time

Income and asset situation:

[*]What income do you have? Together a bit more than 6000 net, 14 salaries, tending to increase
[*]How much equity do you have? 200,000 €
[*]How much equity do you want to put into the house project? 190,000 €

Housing costs:

[*]current rent including heating - 1200 €
[*]electricity – 60 €

We save about 2500 € per month long-term (especially for building), although we haven’t exactly been frugal.

The rough data for our project (KFW 55):
- total costs (incl. 10% contingency): 720,000
- land (already purchased): approx. 60,000
- equity: 190,000
- planned own contribution: 25,000

That means we have to finance approximately 505,000.

Now comes the "tricky" part of our financing.
Over the next 4 years, we will receive a total of 100,000 €. Since we do not have this money immediately, but only within the next 4 years, the question is how to best factor this into the loan.

We already spoke once with an advisor about possible models (no concrete offer). We plan to use the KFW loan twice.

Option 1:
The first thing that came to our and the advisor’s mind: finance 405,000 long-term and take out another short-term loan with 100,000 € and a term of 4 years.

Option 2:
take the 505,000 € long-term and conclude a building savings contract for 10 years. Our remaining debt with KFW would still be 130,000 € after 10 years. The advisor’s idea was that we take the building savings contract and then pay off the remaining KFW loan debt with it. The 30,000 € difference could be paid into the building savings contract as “special repayments.” However, I am a bit skeptical here because building savings contracts are relatively expensive.

I know that an assessment without concrete numbers is difficult and that it would be easier if we already had the 100,000 €. But does anyone have experience with such a situation and tips or maybe a completely new option for financing?

Thanks in advance for your ideas.

Option 2 is too expensive

Option 1 puts you under pressure to actually receive the 100K€ on time and then also invest it. At the current interest rate level, I consider rushed repayment economically unwise. If you need it "for your head," ok, but you don't save anything with it. Put it into the account.

Otherwise, special repayment rights are quite common. With 500K€ financing and the usual 5% special repayment, you can also repay 25K€ p.a. without any contortions. For a small extra charge, you can also get 10% special repayment rights, then it's already 50K€ p.a. After 10.5 years, you can repay unlimited special repayments anyway.

I would therefore simply do nothing in your place. If the 100K€ comes, you can still consider how much and whether you want to put it into the house.

I spontaneously thought of the special repayment while reading. That would be the cleanest solution without pressure. And if it turns out differently, it doesn't matter. You have no obligation.

Either use special repayment, which is then stress-free, or fix 100k for 5 years and then repay. But that assumes the 100k will not be touched. Not everyone can do that.

Thank you for your answers, sometimes you are so fixated on something that you no longer see the simplest option... Solving the whole thing through extra repayment probably does make more sense and also eases the situation for the party from whom the 100 TEuro come.

At the current interest rate level, I consider hasty repayment economically unwise. If you need it for "peace of mind", okay, but you don't save anything that way. Put it into the depot instead.

It is actually more for "peace of mind", since I am not a particularly risk-loving person.

I would definitely go for the special repayment. Since we also have a 500k loan, 100k is cleared in 4 years through special repayments. Otherwise, just invest. At 1 percent interest, it doesn’t hurt much if you don’t repay early.