A psychological approach: How much additional cost does the higher interest rate cause? Add the amount to the purchase price and consider whether you would pay this price for the property
A good approach and we cannot judge that, only the OP can, individual perspective, which I always place very, very great value on.
Not everything is to be weighed in money and sometimes it also makes individual sense to pay more for something because the added value lies in the intangible, and everyone will have their own viewpoint, attitude towards life, and perspective, which is also good and absolutely okay.
What would actually happen if you didn't need a loan because you have the money? What would the Sparkasse say then?
I did not address this scenario. This question occurred to me because I did not assume that anyone has €500k+X in cash to withdraw everything from equity. I am aware of the right to terminate after 10 years. So only a loan with 5 years would be considered if the interest rate fits. If the interest rate is not significantly lower, I would not take the risk either.
If someone has half a million in cash, they also have more. Then they just tell him, sure, you’ll get land and all that, but your portfolio, shouldn’t that be with us?
Due to the inverse yield curve we currently have, the 5-year term will not be significantly cheaper than the 10-year term.
Well, basically – as you have described so far – one will wait until the large creditworthiness with little equity comes in order to get a high financing volume for the house with the land. As described, not nice, but legitimate, and as long as demand exists, from the bank’s perspective, this justifies the bank’s actions.
If someone has half a million in cash, they also have more. Then they just tell him, sure you get land and so on, but your portfolio, shouldn't that be with us?
That would be more than ridiculous. I move my portfolio from A to B with a stroke of a brush... and after 2 months back to A again.
What would the bank gain from that?