Home purchase financing - we cannot decide

He probably has a crystal ball. That follow-up offer will be at the current refinancing conditions. So if the interest rate, for example, will be at 3.5%, the same installment is only possible if the term is extended.

Yes, that's right, he has a crystal ball, I forgot to mention that But I worry less about the 33K than about the 53K or even worse 128K.

No, with the offer you have to get rid of 33K only after 10 years, and then 53K after another 5 years
If you think about it now, in the offer you have 33K for the first 10 years, then 53K for 5 years
Now offer time 10 years for 33K, and then 10 years 128K
Viewed soberly, that’s almost the same stress (k€/year), but you have not already wasted 40,000 in costs.

That the KFW wants to be repaid 33K after 10 years is clear. I always leave that out because it is the same in both offers and I do not necessarily have to consider the KfW to compare the two offers.

Paying out 53K in 5 years = 10,600 per year
Paying out 128K in 10 years = 12,800 per year
-> That is 167€ more per month in comparison. Definitely more.

Away from interest rates, toward something more important from my point of view:
So together you have a net income of almost 4,400€ or 4,100€ (with company car already deducted).
Honestly, I find the desired installment quite ambitious. With an installment of 1,350€, that would be 31% or 33% (company car net) of your . From my point of view as a banker, that is too much. We advise our clients – excluding exceptionally high net incomes – not to spend more than 30% of the for cold construction costs and that is already the maximum value. Furthermore, as you write, family planning is still on the horizon for you. Even if the one who takes more care of the child at first moves to tax class 5 and the other to 3, the rate would then definitely be too high.

That is exactly how the desired rate came about, one-third of net income. Unlike you, neither two banks nor the broker were bothered by the rate. Although one-third is not always one-third. Someone who earns more also has more left over at one-third. Your way of putting it sounds like we have to live on bread and water It won’t come to that. After all, we still get almost 5,500€ per year as a bonus, salary adjustments will certainly happen for me, we save a lot thanks to the company car, and the best thing: we handle money carefully. We do not even calculate with that. 2,750 net per month left after deducting the loan installment is not ambitious?! You must not assume the best case, but you should not be that pessimistic either; otherwise, you should stay in the rental apartment if you do not trust yourself to manage.

I still can’t decide on an offer. I have to recalculate the 40K again to see if it really is wasted and compare the terms / securities.

What would be a possible plan for the worst-case scenario of the still outstanding 128K? How do you handle the residual debt? As far as I can tell, few have a building savings contract (are there statistics/surveys?) Hope that you can make as many special repayments as possible? I do not want to hope for that; it should positively surprise me if I can make special repayments, but I do not want to count on it. And therefore I tend toward the combo with the building savings contract. If it weren’t for the 40K extra effort there… I have to calculate that again…

I don't quite understand the panic about the remaining debt. Why not just another completely normal loan as follow-up financing when the time comes?

As said, the Rs of 128 is not bad; since it is probably the last block. Even if you don’t make early repayments and the interest rate goes up to 4/5 percent, the monthly burden wouldn’t change.

Besides, it should be your only RS. You have already taken care of KfW and paid it off until then.

RS refinancing in the middle, like after 10 or 15 years; and still having a fairly large fixed block (the TA/savings contract from offer 1) is already more difficult to manage. Especially because you can’t just switch the bank, for example, for the refinancing of the 58k. Because your TA/savings contract is still registered in the land register.

It also has something to do with customer loyalty.

That is exactly the problem with option 1. You might still get 30,000 for the KfW blank from a BSK. But 58,000 will only be given to you by your current bank in 15.

If at least the 1st offer included all components (except for KfW) without residual debt risk, it would be worth considering, but with the 58 after 15 it is simply not thought through in terms of usage/costs (at least for the customer; see my post further up about customer retention).

Can't the 1st bank offer a 20-year full repayment?

Mine had the 20-year full repayment basically at the same price as 15 years with residual debt (it has something to do with refinancing costs).

First of all: happy new year

Thank you for your responses. I also don’t know where the fear of the RS comes from. I now also think that it is exaggerated. I shouldn’t just give away the 40T. I have now also played around with a repayment calculator. Even if I only make an additional repayment of 2T per year and the interest rate rises to 6% after 20 years, the loan will be paid off after 26 years. And 2T euros per year are definitely feasible.

Regarding offer 1, I have inquired whether it can be stretched to 20 years in order to fully repay the remaining debt of 53T.

Regarding offer 2, I have asked how expensive an option to change the repayment would be and whether the interest rate will be confirmed. I hope the offer goes through.

Thanks, especially Caspar, for your opinion, it really helped me a lot

What has ultimately come out of it and which offer did you decide on, that would also be interesting to know the outcome?