Full repayment loan with changes in repayment rate

Good day dear community,

we are planning a construction project in Lower Saxony and have already agreed with a bank.
I have some questions about the statements and details of the bank contract.

We need an annuity loan of €340,000 and want to finance it over 20 years.
The bank has presented me with the following offers:

1.76% effective interest rate with an initial 2.00% repayment
1.71% effective interest rate with an initial 2.50% repayment
1.67% effective interest rate with an initial 3.00% repayment
1.62% effective interest rate with an initial 3.50% repayment
1.61% effective interest rate with an initial 4.00% repayment
1.58% effective interest rate with an initial 4.27% repayment (full repayment over 20 years)

In addition, two free repayment rate changes were contractually guaranteed to us during the fixed interest period.

According to the bank advisor, it is possible at the start of repayment (after full disbursement of the loan) to immediately adjust the repayment rate again (down to 2%). However, the first installment must be paid with the agreed initial repayment rate. From the following month, the repayment rate can therefore be reduced to 2%. Since the interest rate does not change during the fixed interest period when adjustments are made, in my opinion I can take the repayment rate of 4.27% and reduce it to 2% in the following month without interest rate change. That way I get the good interest rates and save a lot of interest over the following months/years.

Is this actually possible, even if it is a full repayment loan? According to the advisor, this is not a problem and the full repayment contract then becomes a "normal" annuity loan without contractual impact as long as the loan is amortized over 40 years mathematically.

I am now afraid to lock in a contract with an initial repayment rate of 4.27% and then not be able to reduce it again from this repayment rate.

Please be so kind to help me if you can.

Kind regards from beautiful Lower Saxony,

Fred

Full repayment agreement then becomes a "normal" annuity loan

Both are "normal" annuity loans. It just gives the loan with the high repayment a "special" name.
If the conditions in the contract allow it, you can calmly use the procedure you outlined.

Then I would also choose the highest repayment and then screw it down

I was also recommended this by Interhyp back then. One bank offered it that way, and the advisor also advised me to first make higher repayments to secure better interest rates (three months were necessary), and then to reduce them. Since it is now another bank, I have not made use of it.

Thank you very much for the short-term and good news. I was a bit suspicious because banks usually reward full repayment loans better, and when they notice that one immediately backtracks, it may somewhat affect the trust. Is there any other reason why it would have taken you three months to change the repayment rate?

This is how I grab the good interest rates and save a lot of interest over the following months/years.

But you’re not really saving interest since you hardly pay down the principal. A full repayment borrower then only looks good on paper. How much will you have paid off after 20 years?
The more you pay down, the less interest you ultimately pay.
I’m surprised this comment didn’t come up with my predecessors – I’m certainly no financial expert.