Home financing ever possible? Probably not!

The problem is that many pay off very little with low interest rates at a repayment rate of 2%. With high interest rates like 5%, there is much less principal remaining at the end with 2% repayment. Many people are not aware of that.

That is what repayment calculators are for. You can calculate the remaining principal exactly to the month without/with special repayment at the end of the fixed interest period or loan term.

Were there really such financings? I still financed at around 1% and it didn’t go below 2%, mostly even 2.5% repayment. No bank simply did that.
If then only with much smaller financing amounts (but then the remaining debt is not a problem) or other securities in the background.

You can assume so, at least that's how it was offered/calculated to us by a financing broker at the beginning of 2020. It was actually more about bridging parental leave somehow, but we still decided against it back then. Therefore, I assume that it was indeed standard to offer this to customers. There were also quite a few banks that would have agreed to it (>100% lending and 1 - 1.5% repayment).

The problem is that many people with low interest rates repay very little at a repayment rate of 2%. With high interest rates like 5%, at 2% repayment there is much less remaining debt in the end. Many people don’t realize that.

You have to explain that please, I don’t understand it either right now. You say, ceteris paribus, that with higher interest rates the remaining debt is lower than with lower interest rates? I don’t believe that. But I’m probably misunderstanding something.

You can assume so, at least at the beginning of 2020 a financing broker offered/calculated it that way for us. It was mainly about somehow bridging parental leave, but we decided against it back then anyway. So I assume that it was indeed standard to offer this to customers. There were also quite a few banks that would have agreed to this (>100% loan-to-value and 1 - 1.5% repayment)

Then I must be earning worse than I thought, because back then (also early 2020) various financiers and banks told me that below 2% repayment you could forget it; at that time I understood it as generally valid, so not just referring to myself.

0.5% + 2% = 2.5% ;) The purely nominal repayment is only one aspect when considering the remaining debt. In reality, the development of the financing burden is more interesting, and for that the annuity is decisive.

Yes, I understand, but my point was whether 1% repayment was possible while interest rates were sometimes below 1%. In my experience, no, although some people are now saying yes here. I also believe that people who have nevertheless reached their limits with the annuity can run into problems in 7-8 years.

We set our repayment so high back then (2014) that even if the interest rate for the follow-up financing is 8%, we will have finished by retirement.

Now, in 2022, we have taken out a forward loan (about 4 years) at the same interest rate as in 2014. The rate remains the same and we will be finished several years earlier.
You can already plan your loan in advance so that you comfortably get through the repayment period.

You have to explain that, I don't get it either. You say, ceteris paribus, that with higher interest rates the remaining debt is lower than with lower interest rates? I don't believe that. But probably I am misunderstanding something.

It is the annuity effect. At 5% interest, every euro repaid saves you 5%, so the repayment portion of the installment increases much faster than at 1%. Although that's comparing apples and oranges, because a 2% repayment at 1% interest (=3% annuity) costs less than half the installment of a 2% repayment at 5% interest (7% annuity). That's why honestly I also can't understand why people always talk about interest and repayment instead of installment and term. €1500 for 25 years is much more intuitive than 1.2% interest with 3.4% initial repayment. If you assume the same installment, lower interest rates are of course always better.