Questions about the financing offer

Hello everyone,

we, m31 and w30, are currently planning to purchase a townhouse and currently have two financing offers.

Income approx. €4000 net
Equity approx. €30,000

Purchase price including ancillary costs approx. €370,000

€50,000 of this should be financed through the [KWF Wohneigentumsprogramm]
Effective interest rate 1.46%, fixed interest for 10 years, 3.49% repayment, 25 years term

For the rest we have 2 offers.

1.
€271,000 via amortizing loan
Effective interest rate 2.14%, fixed interest for 20 years, 2% repayment
Special repayment 5% annually

Installment: €925.92

2. €17,000 via [Investitionsbank SH]
Effective interest rate 2.72%, fixed interest for 24 years, 3.03% repayment

Installment €81.03

Or with a building savings contract:

1.
€284,000 via deferred repayment loan
2.20 effective interest rate, 15 years fixed interest/term, no special repayment

Installment: €492.27

2.
Building savings contract
2.509 effective interest rate, 15 years saving phase at €560
16 years repayment phase at €1132

Now we are a bit torn because one advisor clearly advised us against the building savings contract and the other recommended it to us because of the favorable interest rates.
What is important to us is a rate that is as constant as possible, even over a possibly somewhat longer term.

If I have calculated correctly, then the normal amortizing loan should be both cheaper and more flexible for us.

Also, one advisor recommended that we contribute personal labor, which could save us part of the financing amount. The other advisor did not mention this at all.

I hope you can give us some advice.

Best regards

Pauli

You can only contribute own work if you are able to. Does anyone at your place have skills that save money and is there time for it? Otherwise, it's empty talk. And regarding the loan, the amortized loan option also seems cheaper to me. Keep in mind, the advisor earns well from building savings contracts. Upfront fee! Karsten

Thank you Carsten for the information.

We could probably take care of the work ourselves. It mainly involves painting, laying floors, and installing a new kitchen. There should also be time for this, as we are planning for a month of double rent anyway.

And you both want to take more or less the whole month off?

Calculate how long it will take you to clear out the old apartment (and possibly renovate it), how long it takes to tear out all the floors in the house and then lay them again, and how long you will probably need to tape everything off and paint. For the kitchen, it will probably take at least a whole day until it is installed (more likely two).

You probably have planned a few more days just for the move itself, otherwise you wouldn’t be planning with a month of overlap.

(I’m not trying to discourage you from doing the work yourselves!! but you shouldn’t underestimate the time needed)

Kitchen does not count as own contribution in the sense of the bank either, as it cannot be financed anyway (furniture)

Hi everyone,

we m31 and w30 are currently planning to buy a terraced house and currently have two financing offers.

Income approx. €4000 net
Equity approx. €30,000

Purchase price incl. incidental costs approx. €370,000

€50,000 of this is to be financed through the KWF home ownership program
Effective interest rate 1.46% fixed for 10 years, 3.49% repayment, 25 years term

For the rest, we have 2 offers.

1.
€271,000 via repayment loan
Effective interest rate 2.14% fixed for 20 years, 2% repayment
Special repayment 5% annually

Rate: €925.92

2. €17,000 via Investment Bank SH
Effective interest rate 2.72% fixed for 24 years, 3.03% repayment

Rate €81.03


Or with a building savings contract:


1.
€284,000 via deferred repayment loan
2.20% effective interest rate fixed for 15 years/term, no special repayment

Rate: €492.27

2.
Building savings contract
2.509% effective interest rate, 15 years saving phase at €560
16 years repayment phase at €1132


Now we are a bit torn because one advisor clearly advised us against building savings and the other recommended it to us because of the favorable interest rates..
It is important to us to have as constant a rate as possible, even over the possibly somewhat longer term.

If I calculated correctly, I should be cheaper and also more flexible with the normal repayment loan.

Also, one advisor recommended that we contribute own work, which could save part of the financing amount. The other advisor didn’t mention it at all.

I hope you can give us a tip.


Regards

Pauli

These are almost the same conditions and costs as for us, what did you decide on? Where do the good interest rates come from in your case? You must also finance 100%, right?