Loan amount - What is achievable?

ok, then everything fits. Thanks for the explanation.

Recently I was told that at the end of the fixed interest period, a combined interest + repayment burden of 6% (even higher at another bank) must be manageable. Assuming total debts of 600k, this would result in a monthly payment of 3k. Probably too much for the relevant income today.

How would banks view this case? So how do they deal with very short fixed interest periods?

How would banks view this case? So how do they deal with very short fixed interest periods?

For our commercial customers, we calculate 4.5% interest + 1-3% repayment (depending on the type of property) at the end of the fixed interest period (this debt service must be covered at 110%).

For consumer loans, it depends on the bank how they deal with the issue of interest rate risk. With 2% repayment and at least 10 years fixed interest period, quite a bit of interest rate development is possible and can be cushioned. This has to be checked on a case-by-case basis.

Wow, thanks for the active participation!!

: Your assumption about our current actual total debt is simply not correct. About 120 are still outstanding from the rented apartment, about 65 from the owner-occupied one. In addition, the land, of which we still have to pay off 40. That still makes about 225.

Overall, I am well aware that this is basically a real estate bet. For the rented apartment, I have already calculated earlier that I only make a loss if interest rates are over 5% in 2028 *and* the apartment has lost 25% of its value. If the interest rates are below 5%, I simply take out a new financing contract and the rent covers the installment for another 10 years. If the interest rates are over 5%, I have the option to possibly adjust the rent, contribute a little monthly, or sell the apartment. And here I would only need to get "just" 83,000 to break even. Anything below 83,000 would be my loss. I think that is an acceptable risk in metropolitan areas.

Regarding my owner-occupied apartment: The plan was from the beginning to keep the installment as low as possible in order to save equity for the house and to later deduct the interest for tax purposes when renting it out. That has worked well so far. The debt on this apartment is negligible. I earn 350 euros here (after deducting loan installment and taxes from the rent) x 12 months x 10 years = 42,000. That is almost the entire remaining debt. So for me, even if this apartment is worth 0 euros in 2028 and the interest rates are at 15%, I have not made a loss.

Therefore, I don’t really understand what is so bad or unhealthy about it? The scenario just described would be the absolute worst case... And even if that should happen, I still have a mature home savings contract for my house (which I obviously don’t want to sell as easily as the apartments), with which I can at least cushion 100,000.

Moreover, I think that real estate prices will remain relatively constant and interest rates will only increase moderately if at all. Then I could continue playing this game decade after decade...

I know I’m betting high, but I can relatively easily get out at zero... and if interest rates remain fairly constant or rents continue to rise, that is an enormous leverage.

Assuming total debts of 600k, that would result in a monthly rate of 3k. Probably too much for the relevant income today.

If the interest rates are really at 4%, one would have to see if it still makes sense with the rent. If not, you can always sell, but at the moment I see it rather positively, as an additional income.

Besides, income changes over 10 years, or my wife might work more then. If you then assume rents of 600 and 800 (which are very low rent increases), that already covers 1400 euros of the loan. Then you can also buffer another 100k from your own house through the building savings contract, which probably reduces the monthly burden to between 1,300 and 1,400.

This is not meant to be a defense or justification, just my thoughts on it. I would be very glad if someone points out any mistakes!

I consider both existing rental income and future rental income. Please do not only count the installments for the properties, that is unfair. The rental income for the owner's own apartment cannot be avoided if the OP leaves the nearly debt-free apartment and moves into a house.

I have simplified the calculation and from that everything is easily financeable.

That is correct. However, the OP (in their late 20s!!!) so far does not seem to have done much wrong, otherwise such creditworthiness would not be possible.

Wrong or lucky? You can only tell if someone did something wrong when the risk materializes.