Please evaluate the construction financing

Hello everyone,

I have been a silent reader for quite some time. Our building project is becoming serious, and this week we had the first appointment with our house bank to discuss a possible construction loan. Overall, it was a good and very informative meeting. We discussed a possible package. It is quite complex and consists of 5 components - here I ask you for a rough assessment.

About us:
Me (m, 29); employee with permanent contract net income €3,000
Partner (f, 32); employee with permanent contract net income €2,200
No children yet (1 planned in the near future)

Equity:
Cash assets €80,000
Plot 1000 sqm (fully developed; value about €250/sqm)

The appointment with the builder is next. We are planning a solid house with 160 sqm living space + basement + double garage and estimate total costs of €400,000 (our personal limit)

Planned loan: €320,000

Our house bank proposed the following - I do not have the details in front of me yet - so everything from memory:

(1) Classic annuity loan: €120,000 (interest over 15 years)
(2) KFW 153: €50,000 (interest over 10 years)
(3) Bausparer €50,000 (savings phase 10 years to repay KfW)
(3) Wohn-Riester loan with Bausparer (me): €75,000
(4) Wohn-Riester loan with Bausparer (woman): €75,000

---
Monthly rate overall: €1,200

Two effective interest rates were given for the overall package, the meaning of which is not yet entirely clear to me - I suppose it somehow relates to the Wohn-Riester loan: 1.27% and 2.02%

In the above consideration, only the annuity loan is not yet fully secured. After 15 years, there will still be an outstanding balance of €55,000

(1) Option 1: Increase repayment rate
(2) Option 2: Take out another Bausparer (additional fees!)
(3) Option 3: Special repayment

Special repayment is specified at 5%. In addition, we may change the repayment rate 5 times free of charge (only applies to the annuity loan).

So... that's it for now. I hope I have expressed myself clearly. I look forward to your assessment/evaluation. Is this a good "first" offer?

Thank you and best regards!

Oh dear, maybe I'll add something later... but that sounds like an offer from the red S.

Two questions to answer yourself beforehand:
1) What exactly is a property developer?
2) What is a Riester contract?

Hello toxicmolotow,

this is an offer from the competitor of the red S ;-)

Please excuse the terminology... learned something new again. I naturally mean the classic construction contractor.

I am familiar with the basic functioning of a Riester contract – I claim to know what you're getting at. The subsequent taxation, right? That is also a point the nice bank employee didn’t mention in the first appointment.

Although I receive the state allowance annually per contract (154,-- per contract = 308,--) and can make special repayments through the tax refund (approx. 1,000,-- per contract = 2,000,--).

Overall, I am still quite skeptical because that would bind me to an additional burden after retirement age (the subsequent taxation).

You do not have to apply for the funding. The final amount of the housing subsidy account should be stated on the concept, so you can see what might be incurred. That’s why we only took two 50s, and I will forgo the funding for now; the two children are still covered under my wife.

Thanks first of all.

What I found strange during the appointment was that the bank employee will not hand over the detailed offer to us, i.e. some key figures will be missing in the written offer handed to us. I don't know exactly which ones.

His statement was: "I will gladly explain it to you until you understand, but the offer printed for you does not contain all the details. Otherwise, you go to the next bank, they copy our 'super' concept and give you a slightly better interest rate. We don't want that."

Is that common practice?

Thanks to you!

It initially appears untrustworthy.

That is a bad marketing attempt.