Outstanding Debt Protection in 15 Years

@ Musketier: after 10 years, when moving to the 2% interest rate, the annuity also increases, so I see the 500 € per month as a realistic average value. The jump to 1,433 €/month should not be a problem with the usual salary increases, otherwise a lot would have to go wrong by then. The home savings contract would also offer the possibility of a longer repayment phase at a correspondingly higher interest rate (2.3 instead of 1.25 %).

In general, thanks already for the suggestions and feedback. I still find the home savings contract construct a worthwhile option, as I can also pay it annually with a lump sum, which is saved monthly on a daily money account during the year. In addition, half of the closing fee is waived because I share the commission with the intermediary (which, by the way – as a tip – is also possible directly with a building society with a bit of negotiation skills).

,

to me it feels off because you finalized a financing deal in March that will leave you with a remaining balance of €205,000 after 15 years. If you let it run as is, that corresponds to a term of 35 to 40 years. Great for the bank, but obviously not suitable for your repayment potential.

The question immediately arises as to why the bank did not suggest another plan right away on how to reduce the outstanding debt with the remaining repayment potential of €500. Yes, on one hand, you received a very favorable interest rate, but you also paid for it with the low repayment rate and long term. Besides, it is fixed for roughly 10 to 15 years, which would be too inflexible for me.

You are now considering that you have to do something if you don’t want to pay off for more than 35 years. Why wasn’t that offered by the bank? You also mentioned that you did not want a more flexible option with a split into 2-3 different loan types—but in the end, it still comes down to at least a two-track arrangement, where with the currently planned savings you have to “beat” the loan or an alternative loan, for example with prepayment options.

The loan simply does not cover your full potential because you still have €500 left over, so something is immediately “missing” to me. Obviously to you as well—otherwise, you wouldn’t have raised the issue.

Best regards
Dirk Grafe

I see it a bit differently. Accusing the bank of that is like accusing the KfW of only releasing 50K€ at a low interest rate for KfW 70 (old status). Either you commit to the bank and accept the conditions or you don’t. The fact that the OP wants to save separately here should be credited to him positively. With consistency, some effort, and skill, and without much risk, he even beats the loan interest rate with the savings interest and finishes faster than with a higher initial repayment. According to the profile, the OP is a certified business economist. One should be able to assume commercial expertise.

@ Dirkg Grafe:
Thank you for explaining your initial statement. I see that, as someone from NRW, you are not familiar with the conditions of the L-Bank or Z15 loans – which you do not necessarily have to be – but in my opinion, this disqualifies your comment about my financing as a moderator.

I deliberately chose this construct (as Musketier correctly recognized), which was never the subject of this discussion. With the Z15 loan and a parallel saving plan (in whatever form), my total costs are lower than with a "conventional" annuity loan with a higher repayment rate. The question I asked was solely about how to carry out this separate saving most sensibly – not whether the bank advised me well or poorly.

I think everyone should be free to express their opinion here, but as a moderator, I expect factual statements and not unqualified nonsense about things outside their expertise. There are certainly enough trolls already roaming here.

A well-interest-bearing overnight money account yields interest >0.75%. A fixed deposit even more. So why repay more when the credit interest rate is lower than the construction loan interest rate? You just have to be consistent when putting money aside.

I think you have a misconception there. His loan of 285,000 is charged at 0.75% interest. Over 10 years that's about 20,000€. Initially, the overnight money account yields 0.75% on nothing. After one year, for 6,000€ I receive interest, which is not even enough to fill up the tank completely. So even if the credit interest rate is higher than the construction loan interest rate, repaying more would be better.

And one more question to the OP. How old are you, if I may ask?

However, he can no longer repay and has the choice between 0.1% in the [Bausparer] and >0.75% [Tagesgeld] to save alongside the loan for repayment....