Outstanding Debt Protection in 15 Years

Hello everyone, I have a question for the financing experts.

For my financing completed in Mar 2015, I am considering how and whether to secure the remaining debt after the 15-year fixed interest period expires (already now).

Ongoing financing via L-Bank:
Loan amount: 287,500 euros
Interest rate for the first 10 years: 0.75%
Interest rate for years 11-15: 2.00%
Repayment: 2.0 percent (more is not possible in the subsidized loan, special repayments are unfortunately not possible).

Remaining debt in 2030: approx. 205,000 €
Idea:
Parallel savings in a home savings contract:
Closing fee: 1%
Credit interest: 0.10%
Debit interest: 1.25%
Effective annual interest rate: 1.72%
Monthly saving contribution: 490 EUR
Interest and repayment contribution: 1,433 EUR
Loan term: 7 years

Thanks in advance for your opinions, also happy to hear alternative suggestions.

Regards

0.1% interest on credit? You are better off with government bonds
How much can you still save on the side? What loan amount will you still need at the end of the 15 years?

That 0.1% is nothing is clear to me - that is the price for interest rate hedging in 15 years. As stated, the remaining debt is 205,000 euros in 15 years. Incidentally, I can still save 500 € per month without any pain.

When it comes to financing, I wonder who talked you into that!? But well, probably not much can be changed anymore.

The coverage (if financially possible) I would spread equally across 3-5 different products. A building savings contract is of course totally safe - but what is also certain is that you end up with zero returns or even a loss adjusted for inflation. This can be balanced out by having other refinancing products with higher risk but also higher returns alongside it.

I won’t give any concrete suggestions for that, everyone can educate themselves and put together their personal system. In any case, I would avoid putting everything on one product - you already did that with the financing and in my view that is not optimal.

Best regards
Dirk Grafe

500*12*15 = €90,000 - even if you store it under the sofa --> remaining debt €115K. Even with 10% interest + repayment, that would be €950 per month - not much more than the €670 you are paying now. I mean it... better invest your money risk-free - you'll get more out of it than from a home savings contract.

When it comes to financing, I wonder who talked you into that!? But well, probably can't be changed anymore.
Best regards
Dirk Grafe

Hi Dirk,

What is wrong with a financing with 1.34% effective interest rate and 2% repayment with a fixed interest period of 15 years, except that no special repayments are allowed?