Purchase of a single-family house - Financing

Hello dear ones,

my husband and I want to buy my mother-in-law's house in mid-April. This is a prefabricated house from 1994, which we also want to renovate.

About our situation:
He: 25 years old, net salary €2,300, slightly increasing annually
She: 23 years old, net salary €1,500 (only 30 h/week)
Married, planning children in about 2 years

We now have two offers from the bank, where the current loan on the house is still running. We will repay all loans except for a KFW loan for energy-efficient renovation, which we will take over.

Purchase price: €186,000
Additional costs, renovation: €73,000
Total loan: €259,000
No equity contribution (therefore we don’t get the best interest rates)

Option 1:

1. €100,000 annuity loan, 2.45%, 20 years, remaining debt in 20 years: €23,499.83
2. €84,649 repayment loan with building savings contract, 3.7% (interest rate incl. fees), 14 years, (savings €195) fully repaid 2042
3. €50,000 KfW home ownership program with building savings contract, 1.31%, 10 years, (savings €180) fully repaid 2036
4. €24,351 annuity loan KfW energy-efficient renovation taken over from mother, 1.87%, 8 years fixed interest left, remaining debt in 2025: €13,873.70

monthly cost: €1,160.80

Option 2:

1. €100,000 annuity loan, 2.45%, 20 years, remaining debt in 20 years: €23,499.83
2. €84,649 annuity loan, 2.78%, 14 years, remaining debt in 15 years: €42,598.62
3. €50,000 KfW home ownership program, 1.31%, 10 years, remaining debt in 10 years: €32,843.14
4. €24,351 annuity loan KfW energy-efficient renovation taken over from mother, 1.87%, 8 years fixed interest left, remaining debt in 2025: €13,873.70

monthly cost: €1,147.25

I hope you can make sense of this. Option 1 is linked to two building savings contracts, option 2 is without. My husband leans toward option 1 because of the low remaining debt after the fixed interest period ends. I am unsure because of the building savings contracts. Oh yes, we will probably reduce the monthly rate to €1,050, but this will only change the total term, meaning we will pay off slightly longer.

Which option do you think is better?
Thank you in advance :)

Best regards,
Saskia

I hope you can make sense of it.

So-so. And you?

I like this kind of variant:
1. 259K€ total loan at 2.6% fixed for 20 years with a 1150€ monthly payment results in an outstanding balance of ~74K€ after 20 years. Ask your advisor about something like this, simple and understandable.

Do you have an overview with your setups of when you owe how much and how expensive the financing really is to be able to decide which one is better?

Yes, such a variant is more my style as well. But at our Volksbank, they give a maximum of €100,000 for the 20 years and the rest is then over the other amount. Then the two KFW modules are attractive for us because of the interest rate.

Unfortunately, we do not have such an overview yet because we had 3 variants and our advisor said as soon as we decide on one, we will get the plan. We have already discarded one variant and requested last week to receive the two plans for the 2 variants, but unfortunately the advisor was sick this week. I hope we will receive such an overview next week.

Yes, such a variant is more my style as well. But at our Volksbank they give a maximum of €100,000 for the 20 years and the rest is then over the other amount. Then the two KFW components are attractive for us because of the interest rate.

Unfortunately, we do not yet have such an overview, as we had 3 variants and our advisor said that as soon as we have decided on one, we will receive the plan. We have already discarded one variant and requested last week to get the two plans for the 2 variants, but unfortunately the advisor was sick this week. I hope we will receive such an overview next week.

If the bank is so inflexible, I would look for another bank or an advisor.

Have you ever obtained an offer from another bank? Or have you been with an intermediary like Dr. Klein or Interhyp? If not: definitely do it! This way you get an overview whether the offers from Volksbank are the best for you or if it can be done even better (and easier).

We completed through Dr. Klein. A simple annuity loan with a 20-year fixed interest rate. One component. Simple and understandable. The house bank could not match the conditions.

I would leave out everything with [bausparer]. Please also go to the usual [vermittlern]. Why is there no equity? Children = less income and higher expenses for daycare, etc. Always keep an eye on it