Property financing and repaying Aurokredit on the side

Hello everyone,

my girlfriend and I are in the process of buying a property.
My girlfriend currently still has to repay a loan with an outstanding balance of about €5500.
Our financial advisor advises us to continue repaying the loan as usual.
However, we would like to make special repayments so that we completely pay off the car loan except for the last 4 installments (about €1200), (because otherwise a prepayment penalty would be due), as we currently have the equity for this.

Is it advisable to repay it immediately so that we get rid of the car loan, or should we rather save the equity because this would get us better interest rates for the upcoming mortgage?

Thank you very much

For the lender, it is only important whether you can afford the construction financing. They look at your income and offset all liabilities against it. For example, if you pay €250/month for the car loan but have a corresponding income, it would be more advisable to save the equity and use it for the house construction/land purchase. A better interest rate on the construction financing than on the car loan is the goal, as the construction financing runs for a longer period and involves a higher loan amount.

Thank you for the answer

And in the end, does this also affect the loan amount for the house loan, even if in this case it is only a small sum?

That would have been my objection to this. Around 4000,- EUR more equity really isn't the end of the world. Of course, if that decides whether you can pay the incidental purchase costs yourself or have to finance them, I would keep the equity, otherwise get rid of the car loan.

Car loan gone! If the 4k should be decisive for the war, you can surely beg the balance together from family/friends.

Ok, we have accepted it and already paid it off.

Thank you ☺️