Full repayment or 15 years interest lock?

Hello everyone,

we have 2 offers for the construction financing:
Offer 1: 15 years fixed interest rate, interest 1.87%, repayment 2.1%, monthly rate €995
Offer 2: fully amortizing, 40 years term, interest 2.45%, monthly rate €998

which option would you prefer Advantages/Disadvantages

Hard to say. Please provide the total financing amount. Do you really need 40 years to pay everything off?

Do you have a follow-up offer for the remaining amount in 15 years?

I love concise information :rolleyes:

What is important about the 305,000? Security? Low costs? A certain maximum rate?

And doesn’t the financing continue into retirement? Will you still be able to manage then?

From today’s perspective, the 40-year is more expensive, but no one knows what the interest rate will be in 15 years.

Therefore, the 40-year, especially if the budget is tight. Assuming the interest rate is 2% in 15 years, then you also need 34 years for the first offer if you don’t add anything extra to the installment. And if the interest rate is a bit higher, the advantage becomes less and less. Keep in mind that without extra repayment you still have ~195,000 outstanding after 15 years.

I would at least make sure that you have special repayments with the 40-year. And try to make use of them to reduce the total costs.

Is this the only financing component?

Hello,

The rate should be around €1000 per month, which we would also prefer not to exceed, as we are both still relatively young and according to the current situation will not be retired in 40 years. With the full repayment loan, a special repayment of 5% per year is possible. Also, with the 15-year offer, special repayments per year as well as changes to the repayment rate are possible.

Do you have a follow-up offer for the remaining sum in 15 years?
No, we do not have that and it would have to be renegotiated in 15 years for about €200,000.

Is this the only financing component?
Yes, it is the only component.
The house will not be a Kfw55 house, so the €100,000 loan would be omitted.

We are still considering whether the €50,000 equity KFW would make sense.

With the 50,000 equity KFW we are still considering whether it would make sense

No, it doesn’t make sense; otherwise you’d have to worry in 10 years.

Don’t be misled by the repayment change option. The 5% special repayment means paying off 15,000 more per year. You first have to be able to manage that.

Since not retired yet, I would definitely go with the 40-year option. And try to make special repayments possible; otherwise it’s a financing full of security.

Thank you very much. Yes, the 10 years KFW is rather unpleasant, that's why we initially left it out and the conditions resulted as described above.