Offer for the financing of our construction project

Hello, today we received an offer for the financing of our construction project. Total costs approx. 420,000 euros, equity 100,000 euros

Kfw 70 50,000
2.7% nominal (via Ing-Diba)
4.05% initial repayment
10 years fixed interest period
281.06 euros monthly

Kfw home ownership promotion
3.55% 100,000 euros
1.99% initial repayment
15 years fixed interest period
461.38 monthly

Bank loan 180,000
4.1% nominal
1.1% initial repayment
780 euros monthly

total: 1500 euros monthly annuity

Is this a good offer? What should be considered?
Thanks!
wg

Hello WG310,

this is a good and secure offer from Ing-Diba.

The KfW-70 loan can also be applied for at slightly lower conditions with a term of 10 years. However, then with a slightly higher repayment.

One question: Why did you specify a repayment of 1,1% for the construction loan over 180,000 EUR? I found that rather unusual.

Did you receive the offer directly from Ing-Diba?

Please get back to me on this.

Best regards

M. Thiemann

No, the offer is through an intermediary. The 1.1 percent simply comes from the fact that the monthly rate may be 1500. The difference in the monthly installments for the Kfw (converted from the quarterly charge) is simply so high that we could repay a little more than 1% with it. Why is that unusual?

Good morning WG310,

that is of course a good explanation for that ;-)

If you have specified the maximum monthly rate and still had some "leeway," it is even good that you set the repayment a bit higher.

That is actually the unusual thing about it. Usually, there is no more room to increase the repayment a bit.

Special repayments and two changes in repayment are also fundamentally included in this financing.

Good luck with your construction project and best regards

M. Thiemann

Thank you very much for your information! I have just learned that Sparda Bank Ba-Wü has a much better interest rate (3.69%), so we would not even have to rely on the Kfw loan. Unfortunately, we do not live in the catchment area of this bank - so unfortunately we cannot use this offer. That is a bit annoying. The Sparda Bank near us only offers a 10-year fixed interest period.

Hello WG 310,

yes, cooperative institutes in particular adhere quite strictly to the principle of regionality.

There are always some providers who offer financing solutions that are regionally cheaper.

However, this should not influence you. You have a pretty good offer on the table and the KfW funds are still somewhat cheaper than the Sparda Bank's offer.

Moreover, it is questionable whether you would even receive the advertised interest rate – or whether additional loan-to-value surcharges would be added here!

What blended interest rate did your broker show you for your overall financing? It is significantly below that of Sparda, right?!

Best regards

M. Thiemann