Long fixed interest period: BANK vs KFW

Good morning everyone,

yesterday we went to the bank and have now come a step closer to financing. We want to build in the Munich surrounding area and have two considerations. Somehow my head is buzzing and I’m starting to not see the forest for the trees. Maybe you could give your two cents again :).

Which interest combination would be smarter ...

[*]Option 1: Bank 1.45 % (10 years) 360,000 € + 100,000 KFW subsidy (20 years) 1.5 %
[*]Option 2: Bank approx. 2.5 % (20 years) 360,000 € + 100,000 KFW subsidy (10 years) 0.75 %

So the thought is:

1. I prefer to take a longer fixed interest rate with the bank, because more money simply has to be paid back there.
2. I prefer the longer fixed interest rate with KFW, because the interest rates there are great.
3. If I have 20 years with the bank, it’s difficult with large special repayments (who knows what will happen in 20 years).

We definitely want to take one loan for 20 years and one for 10 years.
I’m really very curious about your opinions. Thanks in advance!

You should post your desired rate and any planned special repayments. Then it might be possible to do some calculations. Are fixed initial repayments specified for the KFW subsidies?

What residual debts result after 10 and 20 years with the two variants?

, that would of course be great. I hope the following information is sufficient.

For the 10-year fixed interest rate, the bank came up with a €1210 installment and KFW €320 (10 years). About €1400 would also be our limit. Less would of course be even better. We haven't calculated the installments for the 20-year option. Only a total amount without the basement.

Special repayment bank 3 %.
Special repayment KFW: free from €1000 per month

KFW:

[*]up to 10 years loan term with 1 to 2 repayment-free years and a 10-year fixed interest rate (10/2/10)
[*]up to 20 years loan term with 1 to 3 repayment-free years and with a 10-year (20/3/10) or 20-year fixed interest rate (20/3/20)

>> no fixed initial repayments

Previously there was a typo in the interest rate, here is the correct version:

[LIST]
[*]Option 1: Bank 1.45 % (10 years) €360,000 + €100,000 KFW funding (20 years) 1.5 %
[*]Option 2: Bank 2.25 % (20 years) €360,000 + €100,000 KFW funding (10 years) 0.75 %

What remaining debts result after 10 and 20 years with the two variants?

The KfW should be paid off after the term. If you choose a 20-year fixed interest period, you are finished after 20 or 30 years. 1.5% KfW indicates a 30-year term. Here, I would pay off the 100K KfW after 20 years anyway; this way, you get the 1.3% interest right away. The bank probably initially opts for a 30-year term to keep the rate low and "lure" the customers.

The fundamental question is rather when you want to be done with the repayment.

We wanted to be finished in 10 years, so we only agreed on a 10-year fixed interest period. 4 years have now passed and we are fully on schedule.

If you plan your financing for a longer period, a longer fixed interest period would probably be wiser. Interest rates can’t go down any further, so you won’t get better conditions. Or you take a gamble and hope that the interest rates are still as low after 10 years and then you sign the same agreement again.