Is combined combo building savings/annuity financing sensible?

Hello dear home builders,

It can make you dizzy when you read the sums discussed here in places. We are just glad that we can get a plot of land on the North Sea for 72 euros/sqm in the best suburban location.

But back to the topic, on which I would like to hear other opinions:

The following framework conditions:

2x lifetime civil servants, net approx. 4700 euros. Increasing later. Age 30 and 34.

First, plot purchase, 2000 sqm, 145,000 euros. The new construction will take place approx. 1.3 years later due to a one-year foreign assignment.

The plot is to be divided and sold after the purchase. There are already interested parties. Due to the location, it will also not be a problem to sell it at least at the original purchase price plus surveying costs.

We have estimated house construction costs including incidental building costs at 210,000 euros. About 20,000 euros of that is equity. (The rest unfortunately went for the divorce of the first marriage.) Financing requirement 190,000 euros.

Equity of 13,000 euros is available for incidental costs such as notary, surveying, etc.

The following financing seemed sensible to us:

So, initially only the plot: purchase price: 145,000 euros.

Financed through two annuity loans:

1. 70,000 euros, term 10 years, 3.2% effective, repayment 1%, rate 242.08
euros (theoretical term 42 years at the same interest rate)

2. 75,000 euros annuity loan-flex, flexible term, 2.68% effective,
0% repayment, 165.63 euros.

The second loan will be redeemed immediately upon sale of the plot. Parallel to the first, money not included in the calculation will be saved until construction.

When I am back, the following financing is planned (theoretically played through and offered by Sparda-Bank at today's conditions):

2x Bauspar-Wohnriester, each amounting to 70,000 euros (total 140k)
1x KfW 153 loan (KfW 70 house) amounting to 50,000 euros.

Wohnriester: 2.65% effective, allocation after 13.3 years, savings rate: 175
euros, total rate 352.80. Total term 23.2 years

KfW loan: 2.68% effective, term 10 years, 2.37% repayment, 209.17
rate, total term at the same interest 28.4 years.

Total rate: 1160 euros.

After repayment of the building savers, the full amount would flow into the two open annuity loans. We believe that we will be done after approx. 27-28 years, even if there are no special repayments (e.g. gift, inheritance, foreign assignment, etc.).

We would have liked to fix the interest rates completely. However, the rate would have been too high for us then. Through the combination of building savings and annuity, we tried to combine security with affordable rates.

Annuity loans and KfW will both be renegotiated after 10 years and probably concluded at higher interest rates. But on the other hand, promotions and salary increases, and possibly the aforementioned gifts, inheritance, foreign assignment stand against this.

What do you say about this financing model? Any big pitfalls that I have overlooked? Or does anyone have a significantly more sensible model in mind?

And last question: Could you start a building savings contract now to secure the rates and later convert it into a Wohnriester building savings contract?
And does it even make sense to start a building savings contract now, with regard to house construction in 1.3 years, to secure the interest rates? Possibly the 1% closing fee is lost, but interest rates will probably not be able to fall much more, but will very likely rise considerably.

Thanks in advance for your help and opinions.

Greetings from the North

S&S

As a rule, models with building savings pre-/interim financing are not profitable, even if everything goes according to plan.

The building savings models offer not only security but also risks: - uncertain allocation timing, - no binding commitment for a building savings loan due to a renewed credit check at the time of allocation. In reality, it is unfortunately very rare that everything and all deadlines work out exactly. Any change in deadlines significantly increases the cost of the model.

Riester subsidies can theoretically be profitable, but in practice, there are also many pitfalls that negate the advantages. Occasionally, these risks make it into the media. Riester loans are also possible with mortgage banks.

The models can be easily compared mathematically – simply test several variants in the software. After two hours, you will be smart.

Well, I do see quite often that the financings (even with a [Bausparvertrag] in the background) run according to plan :-)
In my opinion, it is much more often due to the customers/[Bausparer]. They simply miss a payment or reduce the installment. And then, of course, nothing fits anymore.

In my opinion, [Bausparen] only makes sense when the [Bausparvertrag] is fully allocated within the first fixed interest period. Then you have complete interest rate security, combined with good options for special repayments.
But you have to be clear whether you can pay the installments permanently!