How long is the fixed interest period?

Hello everyone,

our project looks as follows:

Single-family house 150m2, all incl. approx. 370,000 euros.
Equity together 110,000 euros, plus 20,000 euros reserve
Net income together 5,200 euros, both 2,600 each. Increases will come (Er bonus, I collective agreement).

Loan 260,000 euros. Of that, 50,000 euros KFW loan with 1.0% for 10 years.
The plan would be to take the remaining 210,000 euros as an annuity loan, e.g. through Sparda.
For 15 years we would have an interest rate of 1.87% and a pretty flexible offer with 10% special repayments and annual rate adjustments. Currently a proper repayment is of course possible, but we are also two full earners without children (they are planned in about 5 years).
I want the loan to be manageable in an emergency with one salary as well. With an average rate of 1,200 euros we would still have about 50,000 euros left after 15 years. Is that too much risk? In 10 years my boyfriend will still have 30,000 from two building savings contracts (which don’t make sense to cancel now).
If we theoretically both earn fully all the time, we would certainly be finished in 10 years.
What do you think?
Split the loan over 10/15 years and accept the residual debt? Or better fix something for 20 years?

Hi!

First: I am not a financial expert. Others know much more about that.

But I have a similar situation in income, loan amount, and preferred rate and also financing with only one salary.

Besides two KfW loans with a term of 10 years, I set the rest of the loan amount for 30 years. The interest rate difference between 20 and 30 years was so marginal that I chose the longer term and thus interest rate security. I am a very security-loving person. :-)

Prepayment was not important to me. The next 10 years, the 'extra' money will go to the house, garden, child, dog, and wife anyway.

Cheers, torsan

I often read that most situations look like the man earns 80% and the woman 20%. It doesn't really matter whether she stays at home or not. With us, everything is possible, namely full repayment in 10 years or struggling with only one income. Currently, I have no idea at all whether and how I should do my job with small children (doctor in a hospital working shifts around the clock). My boyfriend prefers to fix it at 10 and 15 years because he says that even if we still have 50,000 euros left then, the interest rate would have to rise significantly for that to really be a disadvantage. I find that very difficult to assess.

Hi!

To quote John Lennon: "Life is what happens while you are busy making other plans." :-)

In the end, it’s personal preferences. Either long (supposed) security or higher repayment with the hope of little to no interest rate increase. No one can make the decision for you.

Cheers, torsan

But I want the loan to be manageable with just a salary in an emergency. With an average installment of 1200 euros, we would still have about 50,000 euros left after 15 years. Is that too much risk? In 10 years, my boyfriend will still have 30,000 from two building savings contracts (which don’t make sense to cancel now).

Hello, you forgot that you also have to repay the KfW loan during the first 10 years. Then your calculation with an installment of 1200 € no longer fits. If you want to repay the KfW loan with about 484 € additionally during the first 10 years, that works out with a remaining amount of about 50,000 €. Then you don’t really need to worry much about the rest. Is the 30,000 the balance or the building savings sum of the building savings contracts? If it is the balance, you would only have a risk of over 20,000 €, which should also be capped by the loan claims of the building savings contracts. If it is the building savings sum, you have the 20,000 € as a risk. But even if the interest rate were then at 10%, you would have repaid that within just under 18 months with an installment of 1,200 euros.

What is the difference between Guthaben and Bausparsumme? Sorry, I am a complete layman here ^^ My boyfriend would have 30,000 euros in 10 years, which would then become "free" from the contract, and he could then additionally put that into repayment. The Bausparvertrag has nothing to do with our financing and has existed since his youth.