Good offer or wait for negative interest rates?

Of course, this is only an example. With a lower loan amount, the spread is naturally smaller. It should just show how significant even decimal places in the interest rate have an effect. Higher construction costs inevitably lead to higher loans.

We are currently experiencing a historic low in interest rates, which undercuts the previous all-time low from summer 2016 by about 0.3 percentage points for 10-year fixed rates. This opens up tens of thousands of euros more investment potential for homebuilders. We already know what this does to construction costs [Dazu beginnt auch noch das Baukindergeld zu wirken, was für ein Wahnsinn.]

10-year fixed interest rates are available at 1.1% with 100% financing. For example, a 10-year fixed deposit at Volkswagen Bank with top rating and deposit insurance yields 1.3% minus taxes. One might think that anyone putting equity into a house must be out of their mind right now.

I received an offer from HVB yesterday for €310K at 1.1% p.a. over 20 years ( €140K equity). Amazing how the interest rates are dropping right now. The interest savings easily cover the cost of the 10kW photovoltaic system.

If you think interest rates could continue to fall in the near future, why don’t you take out an annuity loan for 5 years? According to the construction financing calculator, you would get an interest rate of 0.37% for a loan of 400,000 euros and 70,000 equity. Then you can amortize 3.5% p.a. and have a payment of 1290 euros. The remaining debt after 5 years would only be 329,359.48 euros. Then you would definitely save the construction cost increases of the next 5 years and possibly have even better conditions. Even if interest rates should rise somewhat, you would again have a better rate because you need to mortgage a lower percentage. This is perhaps the most affordable solution in the current phase (construction prices rising / no significant increase in interest rates expected). In any case, you would have amortized over 70k in 5 years and paid only 6760 euros in interest.

If you think the interest rates could continue to fall in the near future, why don’t you take out an annuity loan for 5 years? According to the mortgage calculator, you’d get an interest rate of 0.37% on a loan of 400,000 euros with 70,000 equity. Then you can repay 3.5% p.a. and have a payment of 1,290 euros. The remaining debt after 5 years would be only 329,359.48 euros. That way you would definitely save the construction cost increases over the next 5 years and perhaps get even better conditions afterward. Even if interest rates rise a bit, you would still have a better rate because you need to finance a smaller percentage. This might be the cheapest solution in the current phase (construction prices rising / no significant interest rate increase expected). You would definitely have repaid over 70k in 5 years and paid only 6,760 euros in interest.

Well, that’s definitely a gamble. I do think it will go down again for a while now, but whether it holds for 5 years, puh.. Theoretically, a large part of the amount is quite well financed at 0.8%, the only thing that bothers me is the 1.5% of the building society combo, but after 15 years I have a maximum of 2% interest on the remaining sum of 150k, which is a good security.

However, I am currently also considering the option suggested here to push the equity and perhaps get a much better interest rate through the 80% financing, maybe even completely for 20 years. Problem: I saw that we’ve already signed the building society contract, so I probably can’t avoid the around 4k closing fees anymore, right? :-/

Regards

Accidentally signed part of the financing arrangement? Oh man... Well, maybe you're still within the withdrawal period. No idea what this will trigger... but at least with the same bank, your chances are bad.

Have you even inquired about an annuity loan with a 20-year fixed term? But if something has already been signed here, the discussion is moot anyway.