Purchase of an MHR - Financing through bullet loan + home savings plan

I would only finance with a bullet loan if it is for rental purposes. Because in that case, the consistently high interest rate benefits me tax-wise on the cost side of the house. For owner-occupied property, always annuity. If my annuity loan is not paid off after, say, 15 years, but there is still 60,000 left, then I pay it off by investing an additional sum x per month in iShares or something similar alongside the annuity. But certainly not in a building savings contract with 1% credit interest.

That is completely legitimate, that you do it the way you think, so it does not have to be the most cost-effective option.

If a consumer wants interest rate security and calculable costs, the full repayment variant after the building saver should prevail.

It should also be noted that your variant with 60,000 euros residual debt after 15 years of fixed interest period and parallel savings of 60,000 euros could possibly be more favorably structured with a variant of 8 years fixed interest period and associated considerable interest savings and a building savings contract ready for allocation after 8 years.

Thank you very much for your comments so far.

One problem with the property, which I have deliberately not mentioned so far, is that the notarization is practically on Monday, as the current owners want to buy another property and, due to the 3 children they have, want to take advantage of the Baukindergeld. Which I can of course understand/relate to. Since the new house is already secured, it will probably only be waiting for the sale so that the new house can also be purchased.

Unfortunately, we only viewed the house last Saturday, so we had little time to deal with numerous financing proposals. The house is being offered through the Postbank real estate agent and the owners’ new house is also being purchased through them, so if we also finance under the Postbank umbrella, everything should run smoothly.

In the meantime, we have also requested alternatives (annuity loans) from the advisor, as he did not offer these proactively. However, these do not look so appealing.

The offers are all from the DSL Bank.

[*]€213,000 / 15 years / 1.52% nominal / 1.55% effective / €624.80
[*]€213,000 / 20 years / 1.85% nominal / 1.88% effective / €683.38
[*]€213,000 / 30 years / 2.25% nominal / 2.29% effective / €754.38

Since the notarization is on Monday, I would like, as long as everything goes "normally" there, to go to another financial broker afterwards, whom we have always consulted before, and run through everything once again.

What I have so far, however, are only financing proposals from Postbank and the financing confirmation without a commitment to a concrete financing model. Do you think that is enough or should one already have the financing fully in place (financing contract) before signing at the notary?

Regards, Danny

Phew, just don’t let yourself be pressured. The fact that the sellers want to buy something new is not your problem. It was supposed to go very fast for us recently as well, which is why we had a right of withdrawal included in the purchase contract, with no commission payable in that case. Maybe that’s an option for you too, if the seller cooperates. We were uneasy about just buying without a financing commitment. These are huge amounts, imagine if something goes wrong! No matter how secure the financing seems, it was still too uncertain for us. As far as I know, you should also be given 2 weeks to review the purchase contract. It seems it went faster for you, from what I read.

@Noalmaxim: You are of course right. The sums I presented initially say nothing. Whether the offered financing is cheaper than an annuity loan can only be determined by comparing the cash flows. But: How many private customers can correctly calculate this for the combination offered here of bullet loan + building savings contract? Probably very few customers, because it is really complex.

My impression, which came to me while reading, and exactly for this reason I deliberately put these two sums out there: This seller, I am deliberately writing it like this, is focused on maximizing his own profit and that of his bank. That is just my impression.

This is also evident from the offered annuity loans: The repayment rate in these offers is around 1.73%. Loan term -> 40 years. Even after 20 years, there is still a remaining debt of 140k after 20 years.

Overall, the interest rates for a 60% loan-to-value ratio also seem quite high to me.

: Yes, we viewed the house on Saturday (04/20) and the notarization is already scheduled for today (04/29). I have now also learned that the owners have scheduled their notarization for 05/06.

Regarding the financing confirmation. This is what we currently have:

Dear family ******, herewith I confirm that we are providing you with the necessary loan funds for the purchase of the MRH in Tornesch, *Straße HN*, in cooperation with IB.SH.

Kind regards

Michael ******** Regional Manager/Financing Specialist

Postbank Financial Consulting AG

Previously, we always had a general financing commitment up to a purchase price of €350,000, but when we lost out at a viewing because we could not present this directly and others already had everything ready.

Yes, we viewed the house on Saturday (20.04.) and today (29.04.) the notarization is already scheduled. I have now also learned that the owners have set their notarization for 06.05.

How is that supposed to work (for the owners)? If they want to claim the Baukindergeld, they are not allowed to be owners of another property at the time of signing the purchase contract. However, on 06.05., it is almost certain that they still will be. Because in Germany, the owner is the one registered in the land register. And it will probably take at least 2 months before they are removed from it. The payment deadline for the buyer alone is 6 to 8 weeks and the land register transfer only happens afterwards.