Two-family house - Two parties, two financing loans?

2021-02-04 13:53:10

Low repayment and low equity contribution for the current loan. The interest can then later be claimed as expenses in the rental.

That’s exactly how I did it with my three condominiums. We will then see from how much/little equity the interest rate changes and adjust the equity ratio accordingly.

Possibly an independent building savings contract could even make sense.
If nothing comes of the house construction and you continue to live there, you repay the loan after 10 years with the building savings contract.
If the house construction happens, you use the building savings contract to reduce the lending value and you have secured favorable interest rates already now.

I have to admit that I have no idea about building savings contracts, because I have always only heard that it’s a scheme by agents so they can earn the highest possible commission, and moreover, the costs would be relatively high. I may have to read up on this again.

2021-02-05 10:40:42

I have to admit that I have no idea about building savings contracts because I have only ever heard that they are a construct by agents to secure the highest possible commission and that the costs are comparatively high. I might have to do some more reading here.

I am also not a fan of building savings contracts. Building savings is basically a bet on rising interest rates, otherwise they rarely pay off. But in the last decades there have been no rising interest rates, which is why building savings contracts are now viewed poorly.

That would have only been the safety option, to ensure a corresponding savings rate despite a low annuity and at the same time secure interest rates for the future. So purely a safety consideration.
Saving is of course also possible via instant access savings accounts or similar.

2021-02-05 12:18:31

Building savings contracts are out of the question. The closing costs are completely useless. The interest on the credit balance is far below the bank's loan interest rate. The loan interest rate is far above the bank's loan interest rate. But as is well known, fools get up every day. This mindset of security down to the last euro seems very German to me. However, it is usually a very bad deal. Those who want collateral can choose 15 years with 4-5% repayment. Then up to 80% would be paid off after 15 years, and the interest rates would not matter at all. Apart from the fact that I assume we will not see any significant interest rates in the coming decades, because otherwise half of the EU would immediately go bankrupt.

2021-02-05 15:07:10

Building savings contracts are out of the question. The processing fees are already a waste. The credit interest rate is far below the bank's loan interest rate. The credit interest rate is far above the bank's loan interest rate. The processing fees can be deducted for rental purposes. If the loan is not repaid but saved into the building savings contract, you can also deduct more. If you then live in it yourself or are retired, you already have fixed interest rates with the building savings contract for 10 or 15 years with unlimited prepayment options.

2021-02-05 15:22:16

"The closing fees can be deducted when renting out." I’ll say this: Anyone who still wants to deduct something can get an invoice from me, no problem! But this also renders the interest rate discussion absurd, because you should actually be happy about high interest rates. Ergo, you can put your money aside, invest in ETFs or something else, and then use it for your owner-occupied property.

2021-02-05 16:09:23

I think it will be financed without a building savings contract. I didn’t do that back then either. Opinions differ on this matter. My partner will contribute as little equity as possible in order to have more equity available for the later house construction. We need to see at what minimum amount of equity the interest rate increases drastically. The parents will accordingly contribute more equity. Next week we need to check which bank agrees to two loan contracts. The first point of contact will initially be the “independent” large financial brokers.

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Two-family house - Two parties, two financing loans?

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