High interest rates with fixed interest, alternative flex loans?

  • Erstellt am 2022-09-27 20:20:26

Gregor_K

2022-09-27 20:20:26
  • #1
Hello,

since interest rates have risen sharply in recent months, I am thinking about the best way to finance the construction project. I received information from Interhyp that another interest rate increase to 0.51% is planned for next Friday. That would put us at about 4% and we would have to stop the construction project, build a "smaller" house, or bring in more equity instead of just financing the ancillary construction costs.

About us...
- married
- 2 adults with 3 children
- household income €7,500, including child benefits and a variable portion of about €1,100 (the variable portion is paid out annually, always for 14 years)
- the house to be financed is €650,000 and depending on the interest rate we will bring in up to €50,000 additional equity
- plot with equity is already available
- ancillary construction costs will be paid with equity
- at least €160,000 equity plus the value of the plot are available in total (we do not want to use all of it)

This week I have looked into alternative financing methods and in particular came across the flex loan. With the flex loan, the interest rate is reset every 3 months, linked to the EURIBOR. Special repayments are also possible every 3 months. Interhyp sent me an offer today for a flex loan and it is very tempting. So the question is, where is the catch? Is creditworthiness checked every 3 months or only once? What I don't want is to be told at some point that my income is no longer sufficient and that the loan has to be repaid. I can live with fluctuations in the rate because I can compensate for them with sufficient equity. Of course, I still don't feel completely comfortable with the thought.

Offer from Interhyp:
Loan amount: 650,000
Nominal interest rate: 0.57%
Effective annual interest rate: 0.61%
Rate: €1,392.08

I have attached the long-term EURIBOR chart for you, which clearly shows that it has not been above 6% in the last 20 years. We can manage a rate of €2,800, with assumed interest rates of 6% we would be at a rate of about €4,300. That would be additional annual costs of €18,000 which could be offset by equity.
 

lastdrop

2022-09-27 20:32:06
  • #2
The interest rate is adjusted every 3 months. Whether it will be 1%, 4%, or 8% remains to be seen …

For me, the risk is practically Russian roulette … over 20-30 years. Good luck with your nightly sleep.

I only see variable financing for private individuals with hyperliquid people who can settle at any time.

Can you upload some more from the offer?
 

Gregor_K

2022-09-27 20:57:19
  • #3


Sure, I can share more. Is this enough for you?

I don't want to take out a variable loan for 20 to 30 years but only until the interest rates have dropped back to a healthy level.


 

SoL

2022-09-27 21:07:16
  • #4
The interest rates will not go down in the foreseeable future. With the high amount and the income, your idea would be, for me, financial suicide with prior notice...
 

Gregor_K

2022-09-27 21:17:05
  • #5


You mean that we won't be able to manage the installment?
 

Tassimat

2022-09-27 21:27:35
  • #6
Somehow I am skeptical, but maybe only because I am not familiar with variable loans. Help me briefly understand the construct:

The 3-month Euribor is currently at 1.1%. How is the margin of 2.75% to be understood? Are these additive percentage points? Then it would already be a total of 3.8% with a strong upward tendency and directly at your limit of 4%.
 

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