Quick Check of Construction Financing Conditions

1.9% is correct, or 2.25% with a 15-year fixed interest rate. This results in terms of 35 or 34 years (assuming 2% follow-up financing). I also find that very borderline nowadays. But if you finish 1-2 years before retirement, you can do it. I would definitely not finance into retirement. Think about it carefully!

Regarding the fixed interest rate, I would definitely not go for 20 years here. After 20 years, you have a remaining debt of €233,000. With a 15-year fixed interest rate, it is €272,000. Honestly, that doesn’t really increase the interest rate risk. The higher repayment of 0.35% in the first 15 years benefits you much more. Ultimately, you pay about €35,000 more interest with the longer fixed interest rate. The 5 years would only help if you had already repaid significantly more, but since still 50% of the amount remains, your plan can basically only work if I can repay as much as possible, thus paying less interest.

Thanks for the feedback. We definitely want to and will be finished before retirement. The current calculation would be valid if we NEVER make extra repayments and NEVER increase the installment, which would be crazy over 30 years just because of inflation. We are supposed to do both continuously from time to time, starting consciously a bit lower because of small children and because there will be costs for the house, and then, of course, increase and repay as early as possible.

I haven’t calculated 35k more interest – have you maybe compared the interest for 15 years at 1.9 with the interest for 20 years at 2.3? Then it makes sense. For the 20 years, you are only allowed to take the first 15 at first anyway ;)

And I think the difference isn’t that big for 5 years more security...

I didn’t calculate 35k more interest - maybe you compared the interest for 15 years at 1.9 with the interest for 20 years at 2.3? Then it adds up. With 20 years, you only take the first 15 initially anyway ;)

And I don’t think the difference is that big for 5 more years of security...

That is not entirely correct. The difference in euros is huge. Due to the higher interest rates for the longer term, you simply pay more interest. The longer fixed interest period of 5 years is largely eaten up by the higher interest rates. Basically, those are wasted years. A long financing only makes sense if you want to take little to no risks. 20 years are 20 years and not 15. Do you have a small child aged 0-3 today? With 15 years, the follow-up financing is due when the child is about to become an adult and possibly become more expensive soon. 20 years could mean that for a 3-year-old child, the studies or training are possibly already finished. These are things you might want to consider.

And very important: the fixed interest period begins with the signing of the financing, the repayment of the financing one month after you have picked up the last euros. Depending on the construction speed, there is a lot of fixed interest time in between—between 6 months and 2 years—where nothing is repaid (except interest). At the end of the fixed interest period, you will always inevitably have more outstanding debt than stated on paper, unless you of course make special repayments. Consequently, the interest is also an item of incidental costs during the construction phase, since you are still paying rent for your current apartment.

Sorry, but I don't understand anymore. I have a large remaining amount overall after 15 years and also after 20 years. If I want to compare the additional interest costs between the rate for 15 and 20 years, I can only look at the first 15 years in each case. Because even after 15 years with the 15-year fixed rate, interest is still paid.

Therefore, you can't assess the longer term as additional interest costs?! This can only be done if the financing is also finished after the fixed interest period in each case!?

I did not consider the first 15 years. You are probably right that the difference is not that big then. But you forget that you paid much less amortization during that time. As a result, the loan runs almost 1.5 years longer, and you pay slightly more interest over the entire term because the remaining balance is correspondingly higher. Of course, this can only be speculated now, as the interest rate for the follow-up financing can only be guessed, but it actually only makes sense if the interest rate rises significantly (which of course is not excluded).

If you plan with special repayments and an increase in the repayment rate, then that's great. You just have to make them. Many people value special repayments, but they are actually used by only a very small percentage.

so I calculated it: 345,000€ bank loan interest rates: 1.92%/15 years // 2.33% / 2 years repayment 1200€/month (2.25%/15 years / 1.9% 20 years) 15 years financing: remaining debt after 15 years: 210,000 repaid: 135,000 interest: 80,000 20 years financing: remaining debt after 15 years: 231,000 repaid 114,000 interest 102,000 remaining debt after 20 years: 183,000 repaid 162,000 interest 123,000 the divergence after 15 years is therefore about 21,000€. with around 230,000€ remaining debt and 2.33% interest, the interest there is still about 140€/month. 21,000€ more interest through a 1200€ monthly payment equals 18 months. plus 2 months for 18x140€ interest + the potentially higher interest for the remaining time roughly adds up to about 2 years. conclusion: for the 20 years financing compared to the 15 years financing you pay 2 years ONLY for more interest. so repayment-wise you do not have a 20 years financing but an 18 years financing, just stretched over 20 years. in the 20 years financing you theoretically repay 18 years (with the conditions of the 15 years variant), but pay in for 20 years. but you also have 5 more years of peace of mind and can possibly refinance better later on (for example because the loan-to-value falls below some magic limit) or have a building savings contract ready for the rest or or or... as many have already written here, people are different. we have 20 years at 1.92%, but in hindsight would have rather chosen 10 or 15 years with significantly lower interest rates (10 years at <1% were offered). one thing you have to be clear about now: unlike people who built 10 years ago, the interest rates can no longer really get better. the big downward interest miracle has already happened. those who built 10 years ago practically get their house for free today (restructuring financing to significantly better interest rates). the savings are so immense, the value increase so enormous (in good locations), that those people have become rich practically by doing nothing. we will not have this luck. at best, we will get similar or the same interest rates in 10/15/20 years. but it could also go up again. but certainly not drop as drastically as a few years ago from 5% by 3% or more to 2%...