Home bank financing, building society saver, repayment

Hello,

I have already read up in various forums and also consulted multiple times (Hausbank, Finanzberaterin, ....), but I am still very uncertain about how best to manage the project.

We are about 37 years old (my wife with child) and plan to buy an existing property. The house was built in 1979 and is to cost €270,000. The additional costs amount to about €25,000. With some minor renovations (Sicherheitskredit?!), we come to a total price of €300,000.

About our income.

Equity: €100,000 (firmly planned and freely available) Equity 2: €20,000 (intended for involuntary repairs and possibly a car if something should happen)

Income 1: approx. €2,700 net Income 2: approx. €1,400 net Additionally, child benefit and maintenance would come, which we both do not include.

We currently pay €1,025 rent cold.

My/our plan is currently to take out a loan for 10 years at an interest rate of 1.59% and a repayment rate of 3%. That means about €940 monthly in numbers. Our plan is to make an annual special repayment of min. 5%.

Since we currently still save about €800 monthly with our rent, a higher repayment would theoretically also be possible.

And here exactly our problem starts. Is that advisable or should one rather commit to a smaller repayment?

Or do you say stop right away and go for 15 years or 20 years! (Whereas my plan A is to be done in max. 15 years)

I would really be happy to hear your honest opinions.

Many kind regards

Stefan

Or do you just say STOP right away, make it 15 years or 20 years! (Whereas my plan A is to be done in max. 15 years)

Without concrete offers, it is nonsense to advise you on this. However, you can be advised to obtain such offers.

Otherwise, surely some will come here and say that special repayments usually are not made anyway.

The planned costs for renovations surprise me a bit. What has already been done if it was built in '79?

Edit: How high is the loan to be taken out? It is not quite clear to me from your numbers.

Hello Backbone,

thank you very much for your reply.

Various things have already been renovated in the house. Windows, heating, insulation, attic conversion... All of this was renovated in 2011 and October 2014.

We would still like to renovate a few floors. ([Dafür sind die ca. 5000 gedacht]) Since I know that there will be some costs after the purchase, we have planned an additional amount of €20,000.

€295,000 inc. all additional costs.
€5,000 floor renovation (mainly material only)

€100,000 equity
This leaves a total amount of €200,000 that we would need to finance.

€20,000 we would have as an emergency reserve for unplanned expenses.

We have offers for 10 years at 1.59% and 15 years at 2.09%.

and also sought multiple advice. (house bank, financial advisor, ....), but I am still very unsure how to best manage the project.

What do the house bank and advisor say? What do they advise you to do?

Unfortunately, it is the case that everyone always has their own opinion. And apparently always wants to earn something...

The house bank (the one with the S) would preferably like to offer me a building savings contract after the first 10 years! I am supposed to only fill this building savings contract with interest for the first 10 years. The interest rate would then be 1.75% after 10 years. Strange... But a very good offer with 1.59% for the first 10 years.

Ing-Diba actually only calculated both cases (10 and 15 years) for me. And then showed me at which interest rate I would start to lose money after 10 years. In other words, if the interest rate is over 3.7%, I lose money compared to 15 years.

My financial advisor believes I should go for 15-20 years and reduce the repayment rate and try to solve everything with special repayments.

My tendency at the moment is really to take the 10 years with my house bank, with a repayment rate of 4% and 1.59% interest. But without the building savings contract. This is affordable for us in terms of payment, and we could even manage something with special repayments.

The consultant at the Red S should be tarred and feathered.

A home savings contract (with pre-financing) is always only a partial solution or serves as an interest rate hedging instrument. Basing an entire (2/3) financing on it is nonsense.

How much interest rate risk are you willing to take? The approach at Ing is not wrong, just not fully thought through.

The financial advisor only thinks about expanding the interest margin. Otherwise, I cannot explain lower repayment and longer fixed interest rates. Only the interest rate risk is reduced.