Financing with low repayment and many special repayments

The fact that the [Sondertilgung] is hardly used is probably due to the fact that many repay at 2.x or higher. Under these conditions, in the end, there is either hardly any money available for additional [Sondertilgung] or it is not necessary.

That is for me just a cliché of those who say they want to start with low repayment. Now all that is missing is the argument that wages also rise and then you have more leeway.

Since we have an existing property, the situation is naturally different, but for the past 2 years we haven't made any special repayments because we prefer to do some work on the house here and there. We were satisfied with the special repayments for the first 1.5 years. In the coming years, a new bathroom is planned. That roughly means 3-4 special repayments if you can't raise the money on the side.

And it is usually the same with new builds. Unfortunately, only very few admit that to themselves.

Many things are only planned after moving in: "we'll do that without stress," or "when we are liquid again," "when the financial situation is clear," etc. Then comes the carport in the first year, the garden house in the second, you want to invest in garden tools in the third, and in the fourth year you realize that all the furniture looks so outdated. And suddenly, there are no special repayments for several years.

All concerns and criticisms are absolutely justified!

Nevertheless, here is an example that it can also work differently.

We have a monthly rate of €1600 and the possibility to make a one-time annual special repayment of €5000 with one component. Unfortunately, no special repayments are allowed with KFW (very unfortunate). And with the building society savings contract, you can make special repayments of any amount at any time.
The loan has now been running for three years. We have made the €5000 special repayment every year and once made a €10,000 special repayment into the building society savings contract.

We achieved this through consistent saving and adherence to our plans. It was intended from the start that we would fully use the €5000 each year.
The €10,000 was still possible after three years because there was a good salary increase two years ago.

So, it is possible, but you really have to be good at "managing money."

Best regards
Specki

At €400,000, 1% repayment + 2% interest means €1,000 per month. If you want to reach 3% repayment, you have to repay almost €700 more per month, or €8,000 more per year. Personally, I wouldn’t trust myself to do that. But as mentioned, it’s a matter of personality.

No, this is not a matter of personality. The scenario described above is negligent.

You are comparing a rate of €1,000 with a rate of €1,700 (I haven’t calculated it exactly) on a loan amount of €400,000.

Even without interest, €1,000 already takes over 33 years for repayment. Anyone who cannot afford the €1,700 (or somewhat less) should give up altogether. If the interest rate rises by just 1% in the next 10 years, it’s over, the house is cold, and the photo hangs in the notice board of the district court.

At a rate of €1,700, the interest can increase by at least 2%, and if the bank cooperates, I can still get at least the 1% repayment done.

We are somewhere around the €1,100 rate for a loan amount of €300,000. And I still see that somewhere at the very bottom edge of what is barely acceptable.

I believe the approach should be different in order to solve the issue of the 1-1.5% repayment.

If one can theoretically afford/ imagine a monthly rate of 1700€ with 3% repayment in practice without deceiving oneself, then one can confidently go for the 1-1.5% repayment and solve the rest through special repayments.

If 3% monthly repayment is not imaginable, then please also abandon the 1-1.5% solution.