Home Financing - Decision Aid

2016-06-22 09:14:32

I just did some calculations on the KfW homepage:

But is the OP aware that the KfW loan runs for 35 years?
(By the way, probably not dramatic, since the majority of the loan is gone after 20 years and then only 175 / 154 euros of burden would remain.)

No, unfortunately I'm not aware of that.
To be honest, I don’t understand it either.
Whether 30 or 35 years, we will be finished in under 25 years, and unfortunately you only have the 1.40% for 10 years anyway.
Therefore, I don’t understand the basic point of 30 or 35 years if you only have interest rate security for 10 years and are practically out of the contract afterward and then need to arrange follow-up financing.
Can someone explain this to me?
Thank you very much :)

2016-06-22 09:24:33

I understand that the repayment rate changes with different interest-only years. However, I cannot understand what the point is of having a term of 30 or 35 years when you do not actually need the loan for that long and you only have a fixed interest rate for 10 years anyway.

2016-06-22 09:40:18

In this case, does it really matter whether 30 or 35 years are calculated? After all, everything is paid off in under 25 years, and the fixed interest rate of 1.40% is only guaranteed for 10 years anyway.

Once the installment is calculated so that you finish after 30 years at a constant interest rate of 1.4%, and once after 35 years. This means, in turn, that after the 10-year fixed interest period, you have a higher remaining debt with the 35-year model than with the 30-year one. So if you want to be finished in 25 years, you will have a different remaining debt amount after the 10-year fixed interest period, which you have to repay over the following 15 years. Since this amount is calculated over a notional term of another 20 (for the 30-year) or 25 (for the 35-year) years, but you want to be finished in 15 years, you have to set the repayment significantly higher for these remaining 15 years.

2016-06-22 09:54:18

Once the installment is calculated so that you will be finished after 30 years and once after 35 years with a constant interest rate of 1.4%.
This means, in turn, that after the 10-year fixed interest period you have a higher remaining debt in the 35-year model than in the 30-year one.
If you want to be finished in 25 years, you therefore have a different remaining debt amount after the 10-year fixed interest period, which you have to amortize in the subsequent 15 years. Because this amount is calculated over a theoretical term of another 20 (in the 30-year case) or 25 (in the 35-year case) years, but you want to be finished in 15 years, you have to set the repayment significantly higher for these remaining 15 years.

Ah, the higher remaining debt with the KFW is then the crux.
That is the problem with the mixed offer KFW and home savings contract. The remaining sum was combined in the offer and further calculated with the total remaining sum.
I will confront my advisor to get this itemized separately.

If I roughly estimate, the KFW remaining amount for the terms of 30 years is about 31,000 and for 35 years about 35,000, each after 10 years, right??

Since the home savings contract will be completely paid off after 20 years, and I can thus devote myself solely to the remaining KFW for up to 5 years (which will presumably still be around 24,000 after 20 years), debt freedom in 25 years is realistic.

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Home Financing - Decision Aid

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