Interest rate fixation: 10, 15 or 20 years?

Which fixed interest period is currently the right one?
Fully repaid after 20 years?
Or more convenient installments and follow-up financing with a 10-year fixed interest period?

Where are the risks? Where are the advantages?

In addition, the KFW loan, which probably also needs to be renegotiated after 10 years...

At today's interest rates? Fixed for at least 20 years and at least 2% repayment. Shorter only if you can repay correspondingly higher. Otherwise, the interest rate risk after 10 years would simply be too high for me. Risks with a long fixed period? There are none, it's only marginally more expensive. But if that becomes a problem, you should reconsider the entire financing... KfW is a bit different, as it is state-subsidized. There will probably be reasonably good conditions for interest rate adjustment after 10 years (my estimated opinion), the current interest savings compared to traditional bank financing can be put into increased repayment.

The most important thing - in my opinion - is the monthly budget. This should not be adjusted downwards when the interest rate is low, "because you are saving". That means: the lower the interest rate, the higher the repayment (with the same budget). I calculated full repayment loans for myself this way, but also 10-year fixed terms with follow-up financing. In this case, for example, the risk was manageable, because the interest rate for the follow-up financing could then be almost 10% with the same budget. If it is lower, either the term or the payment amount decreases. I was already positively surprised. Because a 10% interest rate is quite something. The risk is manageable and the savings are not exactly small. But of course, it depends on many factors. Loan amount, budget, current interest rate and repayment. The paradox with an annuity loan: the higher the interest rate with the same repayment amount, the lower the remaining debt after X years. So if the interest rate falls, the repayment must be increased to avoid having more remaining debt. A low interest rate does not automatically mean a cheap loan. Time is therefore only one of many factors.

After initially aiming for a long fixed interest period (20 years), we have now ended up with a 15-year fixed interest period. If our plan works out reasonably well, the interest rate risk is manageable after 15 years.

Even if the interest rate should rise significantly, this is also associated with increased inflation. Consequently, the value of the loan and the installment will depreciate.

Hello,

with the current interest rates, there is a reflexive tendency to quickly call for the longest possible fixed interest period. However, this does not come for free, but must of course be paid for by a higher interest rate from the outset. The consequence: In the first 10 years, significantly less is repaid given the same monthly rate. Or put another way: We chose a 10-year fixed interest period because this results in significantly more repayment in the first 10 years and after the fixed interest period expires, the outstanding amount is correspondingly lower. Taking this into account, the interest rate would have to rise to just under 6% in 10 years to offset the advantage of higher repayment in the first 10 years. While I consider an interest rate in this range quite possible (though not very likely), as mentioned, the advantage would then be offset and only at an interest rate of over 6% would the longer fixed interest period have paid off for us. Therefore my advice: The figures are not as simple as they appear at first glance. You have to carefully calculate it through to the end for yourself!

PS: Have your financial advisor calculate this directly. Ask him this question: "How high would the interest rate have to be in 10 or 15 years for the longer term to have been worthwhile despite the lower repayment?" A good advisor's service includes calculating this for you clearly and in writing. I would expect 2-3 repayment plans that simulate exactly these scenarios. Then you still won't know where the interest rate will stand by then, but you will have a reasonable basis for making a decision.