Loan interest vs. commitment interest

Hello everyone,

sorry for the maybe stupid question. I am a bit confused right now because I "thought" differently.

Do I pay the full interest (nominal interest) per month from day 1 after concluding a loan agreement + additionally the commitment interest which fully applies after 12 months of commitment-free time?

In my current case 931 euros nominal interest from day 1, construction start only in mid-2022. The commitment-free period ends in February 2023. Construction runs until about autumn/end of 2023. That means in the worst case, with an 800k loan, over 2,000 euros interest???

Until now I assumed that "only" the interest for the commitment applies and the normal repayment/interest starts with the drawdown, in my case from December 2023 :0

Thanks

You pay interest on the part of the loan that you have drawn down. This increases with each partial payment. In addition, you pay commitment interest (note different interest rate) on the part that you have not yet drawn down, but this is usually free for one year. Repayment usually begins as soon as a loan component has been fully disbursed, unless there are grace years. These are often included, for example, with [Förderkrediten] and cannot be avoided.

You pay interest on the part of the loan that you have drawn. This increases with each installment payment. In addition, you pay commitment interest (note different interest rate) on the part you have not yet drawn, but this is generally free for one year. Repayment usually begins as soon as a loan component has been fully disbursed, unless there are interest-only years. These are often included with promotional loans and cannot be avoided.

Ok thanks, that’s what I wanted to hear. I was a bit confused just now. I thought I had to pay the full interest from the start even though nothing had been drawn yet :0 So after installment payments have been disbursed, the nominal interest applies to that amount, and after 12 months, for say the remaining 30, 35% not yet drawn, an increased interest rate of 2%, correct? I was a bit worried... with my assumption, we would have been facing charges of well over 3,000 euros for months (including our rent).

the ones that have not yet been drawn have an increased interest rate of 2%, correct?

I think you mean 0.2%. 2% commitment interest would be deadly.

Depends on whether per year or per month. Commitment interest is often stated per month, for example 0.25% p.m. = 3% p.a.

Commitment interest can still become quite high rather quickly, depending on how much of the loan amount is still available. With your project, you can calculate it yourself, but you will end up with a fairly high undisbursed amount in commitment interest over months because your construction will only be completed in the fall. Was it not possible to start or sign the loan later?