Mixed financing with KFW loan 55 / bank loan

Hello everyone,

we would be very happy to receive feedback on our financing option.

The framework conditions are as follows:

- new single-family house (the KFW55 standard will be met)
- total costs including house, land, incidental costs, etc. = 461,000,-
- equity = 311,000,-
- financing requirement = 150,000,-

The proposal (mixed financing) from our credit brokerage with a monthly total rate of 800,- is as follows:

Component 1: bank loan - 100,000,- / fixed interest period 20 years / nominal interest rate 1.89% / effective annual interest rate 1.91% / repayment rate 2% / rate 324.17 EUR

Part 2: KFW loan - 50,000,- / fixed interest period 10 years / nominal interest rate 0.75% / effective annual interest rate 0.75% / repayment rate 10.74% / rate 478.91 EUR

Mixed interest rate = 1.52%

The aim is to have fully repaid the KFW loan within the fixed interest period (10 years) in order to avoid a possibly unfavorable follow-up financing.

The KFW portion freed up after 10 years will be used to increase the repayment of the existing bank loan from 2% to 4% (rate then 491,- EUR). The rest of the total rate of 800,- EUR will then be topped up with the possible special repayments (up to 5,000 EUR per year).

After about 20 years, we should be done with everything.

What do you think of this option?

A second loan proposal allows better interest rates in the bank loan / KFW loan (mixed interest rate 1.49%) but does not allow special repayments (which should be used later).
In my opinion, alternatively, one could save the "free" money over the last 10 years in an account to then dissolve the loan or repay the remaining debt.

Also conceivable, right?

Alternatively to the above option, one could certainly repay the bank loan faster and stretch the KfW over the 10 years with the option to take care of a follow-up financing, which could be dissolved in case of an unexpected windfall (rather unlikely).

What do you think about that?

Thanks in advance for your answers.

Best regards and have a nice Sunday.

atomicdog

What is there to answer here, it is the most comfortable situation I have ever read in the forum.

Hello! With the great conditions, it would be foolish to reject a prepayment right because of 0.05%. KfW definitely makes sense. It is the same with all banks. One question, you don't want to choose a shorter fixed term and increase the repayment?

Thank you very much for your responses. In the second option, the bank further reduces the prescribed nominal interest rate for Kfw55 from 0.75% to 0.5%. The bank loan is a bit more expensive for that. I also think that the prepayment option could be quite useful. Regarding the fixed interest period, I will have it calculated again. Given the currently very low interest rate, it is often recommended to aim for the longest possible fixed interest period. "It won't be this cheap again," is the universal statement.

Thanks again.

Best regards

atomicdog

Of course it is historically favorable, but you only have to finance "150k". Or is the income situation somewhat lower? I thought with such high equity the corresponding income should be there. Possibly it is also a gift, lottery winnings, etc.

That's correct. The equity mainly consists of a donation. 800 EUR is what we can comfortably afford as an installment.

Best regards