Variable loan possible / sensible?

How difficult is it basically to get a variable loan? Now in relation to our financial situation and the upcoming parental leave?

Just as difficult as a fixed interest loan or a loan if you wanted to build/buy now.

You have 3 private loans with an outstanding balance of 15,000.

These should be paid off directly through equity so that the acquisition financing can be repaid as quickly as possible.

I think a variable financing is not a good idea at the moment. What would be the effective interest rate with a fixed interest period of 15 years, or better yet until the end of the loan? OK, the EU is going crazy with its 0% interest policy. But will that help you in the coming time?

Anyone with a variable rate can have it fixed, should interest rates rise (I understand rising as more than 1%). Just go to the local bank. It’s quick to get an answer. Could also work between the holidays.

Just as difficult as a fixed-rate loan or a loan if you wanted to build/buy now. They should be repaid directly through equity so that the purchase financing can be repaid as much as possible. Everyone can switch from variable to fixed should interest rates rise (I understand rising as more than 1%). Just go to the local bank. It’s quick to get an answer. It might even work between the holidays.

Yes, we'll do that. Well, in this case the loan amount is significantly less. 162,000K compared to the 500,000K we would apply for the entire construction project... I estimate that in an emergency, only my husband's income would be sufficient.

I can imagine that it will work with a variable financing. However, last time you mentioned a small three-digit installment (but I don’t remember exactly). I would now really put in as much as possible to then convince the bank in 2 years with your equity and your saving ability ;-)

Hi,
buy a plot of land, I might fix the financing for 5 years and pay off as much as possible during that time.
Then build in 5 years, if it works earlier, you would have to consider whether to stay with the bank or possibly pay the penalty for early repayment, depending on what is cheaper.
Cheers Olli

I can already imagine that variable financing will work. However, last time you mentioned a small three-digit installment (but I don't remember exactly). I would really put in as much as possible now to convince the bank in 2 years with your equity and your saving ability ;-)

Do you mean the current monthly savings rate? Yes, currently I set aside €400-700 per month. My husband doesn’t do it every month, but larger sums or everything he earns from his self-employment serve as a buffer. So far, that went towards vacations, etc. Now we’re looking more closely at where the money goes. Vacations are not planned for next year anyway, and certainly not every month. There is definitely saving potential there. Okay, before Corona, I still had income of €500-1000 from my self-employment, now that’s gone. But the costs for restaurants, travel, etc. are just as much gone – so that balances out. Certainly, when we have such a big project like the house on our minds, our expenses will be further reduced or will flow in a different direction.

Are you talking about the current monthly savings rate?

No, I meant that only about 700€ were planned as repayment for the original home construction loan, but as I said, I don’t remember anymore.

If you assume that you will need at least a 500k loan, then you have to be able to afford a minimum monthly payment of 1600€ for 30 years. With that rate, you should definitely start paying at least that amount for the next 2 years, because how else will the bank believe you that it’s possible? Otherwise, you have to realistically admit to yourself that it simply won’t work for you.