Prepayment Penalty for Loans vs. Current Interest Earnings

But wouldn't it also be a business case to say, "to hell with the special termination in the 10th year," let’s make full use of the 15-year fixed interest period and continue to invest capital, because ultimately the bank gave us "cheap money" back then.

Of course :)

The same with our home loan: 15 years fixed interest at 1.3%. Here we will also follow the strategy of investing about 25k annually and taking interest income as special repayments. Even if we could already redeem after 10 years, it would be detrimental to give the money back to the bank instead of letting it continue to work for us on good terms. The prerequisite, of course, is that interest rates remain at the current level for that long.

You can decide that anew on an ongoing basis.
Apart from the interest advantage, I would consider whether a riskier component, e.g., in the form of stocks(ETFs), should also be part of the portfolio within the overall assets.

As long as the possible installments of a follow-up financing are not a problem for you, I would consider the home loan topic closed and simply invest for retirement provision. That also opens up other possibilities beyond just fixed deposits.

The mix is important. In the example of the OP, no saver’s allowance has been used so far, so the assets are currently either tied up in the house or kept liquid. I would want to diversify further and not focus everything on one’s own real estate. You simply can’t eat your own roof in retirement.

First, the interest rate for one year is only insignificantly lower

2.70% vs. 3.4% is 26% lower interest (yield). There are certainly bigger interest gaps, but I would not call it insignificant. That would mean 600€ less annual yield (before taxes) on an investment sum of 86,000€.

and secondly, the interest rate increases have not yet fully arrived on the market. I’m not going to bind myself to 3.x% for 5 years if, due to current interest rate policies worldwide, rates will be (significantly) higher again in one year.

Here we are again with expectations. Could be true, could be not.

2.70% vs. 3.4% are 26% lower interest (income)

Well. In the current interest rate comparisons, I can get a maximum of 3.27% for a one-year fixed deposit (including €100,000 deposit guarantee). The discrepancy to 3.4% is therefore only 0.13% and not directly 0.7% p.a. And that for a four years longer capital binding. That is the basis of my statement.

Well. With the current interest rate comparisons, I am at a maximum of 3.27% for a one-year fixed deposit (incl. T€ 100 deposit guarantee). The discrepancy to the 3.4% is therefore only 0.13% and not directly 0.7% p.a. And that for a four-year longer capital tie-up. That is the basis of my statement.

Where is this condition available? Very interesting

You can get the interest rate everywhere for 5 years.

But again. Anyone who invests their money today for longer than 1-2 years has not recognized the times. Firstly, the interest rate for one year is only slightly lower, and secondly, the interest rate increases have not yet fully arrived on the market. I’m not going to tie myself to 3.x% for 5 years when, due to current global interest rate policies, rates will (significantly) be higher again in a year.

That’s why the mentioned short-term strategy is currently used until we reach a high interest rate level, in order to then fix it for a longer period. I am not an expert but also think that there is currently more upward than downward potential.

I just read another email from my bank, there is an additional 5.5% solidarity surcharge on the amount of the withholding tax. Simplified example: 3000€ interest income, 2000€ exemption (joint filing), 1000€ taxable at 25% = 250€ and from this again 5.5% = 13.75€. So there remain 2736€ interest income if no additional church tax is paid.

Hello,

I am not sure if I am overlooking something. Therefore, a quick question:

We pay 0.7 percent interest on our loan. We amortize 4 percent. We pay 200 euros interest monthly and amortize 1200 euros. The amortization rate may be changed a total of 3 times.

Would it make sense to change the amortization rate and amortize as little as possible (lowest permitted amortization rate) and put the saved money into a [Tagesgeldkonto] or a short-term fixed deposit to benefit from interest rates above 2 percent?

We save well and do not make special repayments. Currently, we save on a [Tagesgeldkonto] with 2.3 percent because we want to pay off a remaining debt of about 150,000 euros in one lump sum in about 13 years.