New single-family house construction through partial mortgage swap or let it be?

It's quite simple.

There are currently 500,000€ in the account.

Of this, 220,000€ is financed until 2029 at 1.7% with a rate of just under 980€. I can pay it off at any time without prepayment penalties.

Net equity thus currently 280,000€.

Umm, and why don’t you just pay off the loan in one lump sum then? This way you’re practically giving away almost 1000€ every month. You’re not doing anything with the money right now. And I could imagine that having two loans won’t improve the conditions for a third one (which you will definitely need in case of another house construction). Is this setup really advantageous?

Ok, understood. It currently makes sense if interest on deposits > interest on credit. And it makes sense if you want to build again. With these conditions, the project is already possible, the only question is how expensive do you want to build? You already have many wishes. At the end of the fixed interest period it will be expensive, but then you could still reduce the repayment.

we are not giving away €1,000, because 1. the installment includes a repayment and 2. the credit interest rate is slightly lower than the deposit interest rate. Although we have €1,000 less to spend, we are essentially saving that.

exactly, that’s the point. How expensive will it be. On Sunday we will go to the prefab house center and get an initial indication from 2-3 providers with the development plan and everything. After that, we would talk to the company again and discuss the price for the plot, as they still have 5 available and currently it is a bit more difficult, as they themselves say.

How confident are you that you will sell your townhouse at the targeted price? And please don't say now "a real estate agent told us it will work 100 percent" :)

Don't be offended, but even here in the Munich area, houses remain unsold and are regularly reduced in price. This is no longer a sure thing...

I can redeem you at any time without prepayment penalty.

That should not be possible with regard to anytime. Because that is only possible in the case of object exchange or pledge exchange. If there is no exchange, i.e. a new object, and you settle the termination prematurely, then the prepayment fee applies.