Loan interest rate with 15 years fixed interest period?

You have to understand the mechanics and draw the conclusions that make sense for you. It is advantageous in the first few years to strongly reduce the loan so that the compound interest decreases, whether you do this through high repayments or special repayments is almost irrelevant. Low repayments and high special repayments at least always provide a potential emergency fund, in my opinion regularly running repayments on the edge is not the best idea but everyone thinks differently about that.

: inherit!! inherit rich!! or winning the lottery you forgot

Hello everyone.

After visiting 5 banks, I have now reached the end, luckily, the running around is not without effort!

In the race are Volksbank, Wüstenrot, and Kreissparkasse, which is my main bank.

I would like to quickly show you a financing proposal from Wüstenrot and would appreciate your opinion.

Wüstenrot:
- 160,000 Euro loan.
- Fixed interest rate for 15 years.
- Initial repayment 4.20%.
- Effective annual interest rate 1.80%.
- Monthly rate 800 Euro.
- Special repayment up to 10% (annually).
- Remaining debt after 15 years = 44*** Euro.

The same with 20 years, also Wüstenrot:
- 160,000 Euro loan.
- Fixed interest rate for 20 years.
- Initial repayment 4.05%.
- Effective annual interest rate 1.95%.
- Monthly rate 800 Euro.
- Special repayment up to 10% (annually).
- Remaining debt after 20 years = 1600 Euro!

What do you think of the two offers?
If I decide on Wüstenrot, then one of these two loans would be an option.

Thanks!

Best regards

I would take the first one. Even if you only make occasional special repayments, you can reduce the remaining amount further, and if you still need to finance 20-30k, an interest rate increase is not so bad.

With the second one, you might lose something if you finish much earlier with special repayments. You would have basically paid the surcharge for the 20-year fixed interest period "for nothing."

To be absolutely sure, you could play around with a calculator to see what happens if you manage, for example, x euros in special repayments per year and what that means for the remaining loan amount with an interest rate increase of, say, 3%. But a lot depends on how much special repayment you plan.

Thank you first of all for your quick response.

I thought with a 20-year fixed interest period that I would be on the "safe" side since there would be no remaining debt.

The thing with the special repayment is also a matter of consideration, in my case 10% max. Of course, it’s good to have it, but personally, I think the "buying greed" can be strong when you have a few hundred on the side and then use it for something else rather than repaying at the end of the year.

But can one say that both Wüstenrot offers are okay in terms of the concessions?

I have the second appointment at my house bank (Kreissparkasse) next week and am curious about what has changed regarding the interest rates, since the rates have increased by up to 0.5% in the last 10 days!

I’m curious if they offer 4% repayment with an 800 euro monthly rate!

Best regards

I join in finally. The risk is very manageable with the first option, and as long as 2,500€ are invested in special repayments each year, you will be almost done in 15 years.
(I wish for such conditions in 8 years, when my first 10 years are over.)

How likely are larger special repayments?
If regular special repayments (annually >4000€) are actually to be expected, even a 10-year loan would be worth considering, provided the conditions fit.

It is like this, I will ONLY MAKE SPECIAL REPAYMENTS if a) I come into money through winnings (lottery, etc.) or if my grandpa dies, then a small to medium lump sum of money would come (amount not known and I don't want to think about it for now). Sure, I could save money monthly, but honestly, if you have a few hundred left over, I don't think buying reason is really active when it comes to family, for example (daughter, vacation, etc.)!