Is this financing okay?

Hello everyone, I would like to present a financing option for discussion and kindly ask you to write a brief comment.

The plan: 390 kEuro loan for a used property, value of the house 345 kEuro, monthly repayment 1480 Euros, approx. 5.5 kEuro income.
thereby

- 50 kEuro via KFW at 1.45%
- 155 kEuro at 1.34%
- 185 kEuro at 1.91%.

That comes to about 1.66% I believe.

Interest rate fixed for 15 years, afterwards 185 kEuro would still need to be financed.

We have an alternative offer for 10 years at 1.17%, which seems too short to me; for 20 years there were only offers with building savings contracts, then the providers claim an interest rate of approx. 1.75% fixed.

I prefer rather simple offers that I also understand. Or can the above offer still be topped by an offer with building savings?

Thank you very much for a brief response,

TS

Please provide more details about the respective repayments and fixed interest periods of the individual loans. Where does the split at 155/185 come from?

The initial weighted interest rate is 1.62% nominal.

Thank you for the answer! Kfw has a fixed interest rate for ten years, the splitting of the two large loans was done by the bank according to the assumed value of the property. The fixed interest period of these loans is 15 years. The repayment rate is 3%, the monthly burden is 1480, this is planned over 30 years, whereby I have free special repayments and will also use them diligently. This also corresponds to the experiences of my colleagues with the same salary, which is 5.5 net. If I assume "only" 2000 euros per year in special repayments, we would still have about 145,000 euros left after 15 years. To me, this actually sounds like a pretty good offer. Thanks for assessing and answering!!!

I only evaluate and assess the financing and the resulting costs and options. Others should consider the affordability. But that should be fine.

Now to the financing and some calculations... but how... it only makes sense if I choose the following "priority order":

1) 155 TEUR first-ranking with 60% of the BW
2) 50 TEUR KFW Program 124???
3) 185 TEUR subordinated.

Now it no longer makes sense for 1 + 3 to have the same repayment rate... okay, actually, it does make sense for the bank because then they earn more interest over the long term during the term. So my advice would be to reduce the repayment on 1 to the minimum (1 or 2% p.a.) and to use the amount saved for a higher repayment on 3.

Basically: The higher the interest rate, the faster you should repay that part to reduce interest costs. The same applies to special repayments, which have absolutely no place in 1 as long as 3 exists. And after 15 years, the dice will be rolled again anyway.

Side note: Why 390 TEUR loan on a property value of 345 TEUR (after renovation/refurbishment)? How much equity is being used alongside? What are the ancillary costs?

The ancillary purchase costs have to be financed "thanks to" the lack of equity. Ancillary costs will be around 400 euros for a reasonably modern house. We have had these things checked by experts, from the construction engineer to the energy guy. The tips on the individual loans are absolutely helpful and are being discussed with the bank "advisor". What is your assessment of the effective interest rate and the whole offer? Can something like this be topped and when is a building savings contract recommended? Should we, come hell or high water, look for a longer fixed interest period? Thank you for your time this evening!!!!!!!

So I have 20 years fixed at 1.62% (pure annuity loan) with an outstanding balance of about €20,000 (without a single cent of special repayment). If we only do €1,000 per year, we are done. But if not, I don't care whether we are at 8 or 10% interest. An outstanding balance of €185K would be too risky for me!

Why do you have no equity with €5.5K monthly?