First financing offer

I'm still working on comparing various options under assumptions of different interest rate levels after x years.


I actually didn't ask for help, but just shared my current offer for comparison - as well as my thought experiments.

10 out of 10 financial advisors say that too, because they have different interests than I do.

I'm not sure exactly what you mean by your comment on point 3. Are you referring to home savings/Riester?

If the interest rate rises that sharply in such a short time, you have "won," otherwise I have. So far, so clear.

I tried to determine the "break even" point (excluding special repayments).

Fixed at the offered 1.11% for years 1-5 and fixed at 2.10% (assumption) for years 6-10 leads to the same remaining debt after 10 years as if you were to fix directly for 10 years at the offered 1.53%.

Fixed at the offered 1.11% for years 1-5, fixed at 2.10% (assumption) for years 6-10, and fixed at 3.50% (assumption) for years 11-15 leads to the same remaining debt after 15 years as if you were to fix directly for 15 years at the offered 1.95%.

Of course, there are countless other combinations that could be calculated; I will continue to experiment with those.

Do I understand correctly that with a 5-year fixed interest rate you can have a maximum interest rate of 2.10% in 5 years in order not to end up being more expensive than locking in for 10 years right away?

Of course, it’s up to you to estimate that, but I don’t really find an interest rate of 2.10% unrealistic; no, I think such an interest rate is more likely than it being lower.

I just don’t understand why people only lock in for such a short time given the current mortgage interest rates. But tastes and risk tolerance (for relatively less money in relation to the total construction sum) are simply different...

If I have no error in my Excel model, then it means exactly that.

But my thought goes one step further. Instead of fixing 10 years at 1.53% now and then maybe having 5% in 10 years and then having to refinance, take only 5 years at 1.11% now and then, after these 5 years, fix for another 10 years at, say, 2.x%.

I am interested in which combination leads to which result after 15-20 years, since the complete repayment takes about that long. If I only consider the first 10 years, then I agree with you that it is not necessarily worth the risk (after 5 years with the 5-year fixation, the remaining debt in my case would be 6,500 EUR lower than after 5 years at the interest rate of the 10-year fixation). However, I still need to calculate this further variant (first 5, then 10 years fixed).

15 years fixed plus regular special repayments (so that the annual burden roughly corresponds to what we have already "simulated" in recent years [Kredit ETW, Kredit Grundstück, Sondertilgungen]) also almost leads to the goal. The remaining sum is no longer worth mentioning when considering that it is devalued by 15 years of inflation.

This is a bet on falling, stable, or only slightly rising interest rates, just as the building savings contract is a bet on sharply rising interest rates. If there is enough "leeway" in 5 years, in case the interest rate should rise sharply, it can certainly save a considerable amount of money. Since the value of the collateral can also be checked during extensions (after, for example, 5 years), one should have a relatively high repayment rate, so that a higher loan-to-value ratio than at the time of loan origination does not suddenly appear due to new bank valuation methods.

This is a bet on falling, stable or only slightly rising interest rates, just like the home savings contract is a bet on strongly rising interest rates.

I see it exactly the same way. At the time of signing now, there is an 80% loan-to-value ratio; with a new contract after 5 years, it would be a 60% loan-to-value ratio (the next most favorable "interest level" according to the savings bank) – of course assuming that the house value neither increases nor decreases.

We initially approach interest + repayment at 5%, i.e. 3.89% repayment (fixed for 5 years) or 3.47% repayment (fixed for 10 years) or 3.05% repayment (fixed for 15 years). Prepayments on top.