House purchase - improve equity through installment loan?

Hi everyone,

the following situation I would like to hear your opinion on.

Fixed: upcoming car purchase ~15k
Planned: house purchase ~550k this/next year
Monthly income: together ~7.2k net (partner 3k / partner 4.2k) child(ren) are planned. Parental leave should be equally split between both partners.
Available equity: ~40k

Question: Does it make sense to finance the car "cheaply" via an installment loan and thus save the equity for the mortgage loan? A 10-15k installment loan incurs ~1-2k loan costs, while the 10-15k more equity in a later house financing could mean a significantly higher difference in loan costs.

Is this a sensible line of thought assuming good creditworthiness?

Thanks in advance.

With your salary, you are rather moderate savers or where does the money go? Children will cost you good money. Normally, the 15k is a story of 6 months (6*2.5k). With that volume, you should also consider whether it brings interest savings. I would not take the unnecessary interest costs.

The installment loan is indeed taken into account by the bank, so it doesn't make a difference. Or does it? I would postpone the car purchase.

The installment loan is indeed taken into account by the bank, so it makes no difference. Or does it?

Not during the determination of conditions. It factors more into the creditworthiness assessment. Has no effect on the interest rate.

So one can conclude:

- with such small amounts (10-15k), the impact on loan conditions for house purchase is minimal or non-existent, because e.g. conditions are also affected by worse creditworthiness (ongoing installment loan).

I recently had a case calculated with 50k or 100k equity contribution and there were big differences in residual debt and interest payments. That’s how I got the idea whether there is a case for improving equity with an installment loan, especially when a car purchase is imminent.

Attached is the comparison:

Left = 550k with 50k equity
Right = 550k with 100k equity

So one could conclude:

- with such small amounts (10-15k), the impact on the loan conditions for a house purchase is minimal or nonexistent, because, for example, poorer creditworthiness (ongoing installment loan) also affects the conditions.

I had a case calculated earlier with 50k or 100k equity contribution and there were big differences in remaining debt and interest payments. That’s how I came up with the idea whether there is a case where it makes sense to increase equity with an installment loan, especially with an upcoming car purchase.

50k or 100k is not a 15k delta. Roughly calculated, for example, 0.1% interest is worth about 180€ in interest per year (15€ per month * 12 months). Over 10 years that is 1,800€ interest plus compound interest. But ifs and buts. If the house becomes more expensive, 15k may not make a difference. With your 50 or 100k you should also consider that the loan amount is different and accordingly the remaining debt.