Home Financing - Decision Aid

Would you then recommend an annuity loan to me?
I posted the offers in post 16 online.

My statement referred to "stretching" the term of the KfW loan. In my opinion, that is pure window dressing so that your installment still fits.

I would advise you:
Have comparable offers (same annuities for the same terms) made to you in scenarios that you understand.

So the topic is too complicated for us, we will focus exclusively on annuity loans. Here I already have a question about an offered mixed product. 10 years KFW, with the first year interest-only. Remaining amount 20 years fixed interest rate with the bank. This first interest-only year with the KFW doesn't bring any benefit at all, does it? Can it be removed and say that one wants to start repaying from the beginning?

Here are the two options:

1.
Loan 185,000
20 years fixed interest rate, 2.21% (effective 2.25%)
monthly 841.75 € (3.25% repayment)
Balance after 20 years 33,957 €

2.
KfW 50,000
10 years 1.40% (effective 1.44%)
3.51% repayment
Balance after 10 years 33,185 €

Loan 135,000
20 years 2.22% (effective 2.26%)
3.45% repayment
Balance after 20 years 17,870 €

Rate both together:
monthly 1st year 696.21 €
from 2nd year 842.39 €

What do you think is more recommendable?

Thanks and regards Nescool

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This first year without repayment with the KFW doesn't bring you anything at all, right? Can you cancel that and say that you want to repay from the beginning?

Normally, you start repayment on a loan when it has been fully drawn down, i.e., after the end of the construction period. Before that, you only pay interest during the availability period. The availability period is often a whole year. So during the construction period, during which you usually still pay rent, you do not also have to pay the installment.

The KFW loans would put you in a dilemma without the repayment-free period. You want to draw them first because of the low interest rates, but then you would already have to start repayment. Thus, you would have a double burden of rent and repayment. So that you can still use them first without getting into this situation, there is the repayment-free year. This makes quite a lot of sense in most cases.

The second one is clearly cheaper and your repayment is higher. Have it recalculated once again with a constant rate and 15 years, that is more worthwhile in my opinion.

Normally, you start the repayment of a loan when it is fully drawn, that is, after the construction period ends. Before that, during the availability period, you only pay interest. The availability period is often a whole year. This means that during the construction period, when you usually still pay rent, you do not have to pay the installment as well.

The KFW loans would put you in a dilemma without a repayment-free period. You would want to draw them first due to the low interest rates, but you would then have to start repayment immediately. This would result in a double burden of rent and repayment. To allow you to use them first without getting into this situation, there is the repayment-free year. This makes quite a bit of sense in most cases.

However, in our case, it is a ready-to-move-in existing property.