Make a special repayment or pay off the KfW loan?

Hello!

We have bought this house. Now we are facing the question of whether we want to make a special repayment at the end of the year or save the money for the expiration of the KFW in 10 years.

Our savings plan looks like this: out of the 50,000 from the KfW, we will still have 39,000 left after 10 years. We have a fixed interest rate of 1.59% for 20 years with our bank. The KfW interest rate is (as always?) 1.4%.

Now it would be interesting to know which option would be more worthwhile. Any tips?

What amounts are you talking about for the [Sondertilgung]?

What are the future expectations for the [Sondertilgungen]? Will you manage to accumulate the 39K€ in 10 years? Or maybe even much more?

How much can/will you repay early per year? I would probably split it and set aside EUR 4,000 per year for KfW and repay the rest early.

Is the repayment on the bank loan also as low as with the KfW loan (2% repayment)? Then I would probably put everything except for a small reserve into the special repayment on the bank loan. Because with 2% repayment, you are still quite far from fully paying off the loan even after 20 years.

So the repayment rate of the KfW is 2.3% The repayment rate of the bank is 3.5%.

Well, will we manage to raise the 39k in 10 years? As the saying goes - what you set out to do and what actually gets done are often two completely different things ;o). Generally, I would say: yes, we can do it.

But let's simply assume a reserve of €3000 per year. So not enough to really pay off the KfW. So reserve in the sense of: this is really leftover. Nevertheless, reserves are also being set aside for possible repairs etc.

Then I would tend to go for option 1. If interest rates should rise sharply, which should also affect the credit interest, you can still switch in the following years and save the money for the partial repayment of the KFW loan.