Term Explanation - KfW Funding

Hello, my name is Patrick and I am 28 years old!

Brief background:

So my girlfriend (future wife) and I have been thinking about building a house for a few days now. The plan is a two-family house, one part for my wife and me, the other for my mother. Of course, it should be built according to the new Kfw Efficiency House standard. Thus, a subsidy of €50,000 per apartment would be possible, so 2x€50,000 if I understand correctly. Since we have had very little to do with financing etc. so far, some terms are difficult to understand, such as the following.

tilgungsfreie Anlaufjahre: this means, in my opinion, that some of the first years are repayment-free. So I do not have to pay installments during this time. However, I have read that the repayment-free initial years range from 2 to 5 years. Does this refer to the subsidy for one apartment, so that it is 10 years for two apartments, or does it apply to both apartments?

What does the fixed interest rate mean?

And as I have read, the terms can be chosen from 10 to 30 years. What does this mean? What kind of terms are these?

I hope you can help me without answering in technical jargon ;)

Thank you in advance!

Regards Patrick

Hello Patrick,

The first year is always repayment-free for the mentioned KfW loans.

Furthermore, you can freely choose how long you would like to take advantage of a repayment-free period.

However, since the terms are fixed, your repayment will of course increase the longer you extend the repayment-free period at the beginning.

Interest rate fixation: The interest rate is fixed, for example, for 10 years and then renegotiated for the remaining term.

The term of the KfW loans is given in three variants. You can freely choose one of them.

If you opt for a longer term, the repayment decreases and thus your overall burden from the financing is reduced.

With shorter terms, you have to repay more and therefore have a higher monthly burden.

I hope that was clear.

Best regards

M. Thiemann

Hello,

...If you choose a longer term, the repayment and thus your total burden from the financing decreases.

Well, I would think about that again.;)

..With shorter terms, you have to repay more and thus have a higher monthly burden.

Addition to this: The total effort becomes lower!

By the way, the one-year repayment exemption is forced, so it increases the total effort!

Best regards

What is meant by total expenditure?
With a one-year repayment-free period, a double burden during construction would thus be excluded, or am I seeing that wrong?

Hello,

what is meant by total expenditure?
with a one-year repayment holiday, a double burden during the construction would thus be excluded, or am I seeing that wrong?

The total expenditure of a financing is the sum of the annuities (interest and repayment) until the residual debt = 0!
Due to the one-year repayment suspension, the sum of the interest payments is higher than if repayment started immediately. Just do the math!
There is an old rule: repay as hard as possible! That still applies, despite sometimes strange financing products.
What kind of double burden is meant here is unclear to me :confused:
best regards

well yes, when experts get worked up... ;-)

Sorry for the terminology confusion.

By "total effort for the financing" I obviously meant the total monthly installment and not, as interpreted here, the amount you ultimately spent in total for your financing.

Best regards

M. Thiemann