What is more worthwhile - calculation methods?

  • Erstellt am 2019-04-04 13:43:51

DimaNDS

2019-04-04 13:43:51
  • #1
Hello,

we currently live in a house that we have financed. The loan has an 1.61% effective interest rate, which is not bad at all, and can be flexibly repaid between 1-10% (currently 10%). In addition, there is the option of a 5% (9,000€) special repayment which we have always used so far. Thus, we have repaid the original loan of 180,000€ down to 87,200€ today. The fixed interest period runs until October 2025. If we continue to repay at this rate, we would be finished relatively quickly.

Now we want to build a new house and would like to take out financing for this again.
Approximately 300,000€ are needed, which we would currently get for about 0.75% effective interest rate.

If we rent out the current house, we are able to repay a total of 2,800€ per month.

Now the question arises as to what we should do with the current loan.
Is it cheaper to repay the new loan as much as possible and possibly reduce the other loan to 1% repayment, or should we first pay off the old loan and keep the new one’s repayment as low as possible? Or maybe in a certain ratio? Or even take out the new loan 87,200€ higher and repay the other one in advance?

How does one calculate this?
Unfortunately, I haven’t found much about this on the internet, but I am also not very familiar with the subject.

Is there anyone here who can calculate this? What information do you need for that?
 

Lumpi_LE

2019-04-04 14:13:16
  • #2
There are repayment calculators, e.g. from Interhyp - just google it. You can run through your 3 scenarios there and see where more remains.
 

DimaNDS

2019-04-04 15:34:55
  • #3
Sorry, I did find the calculator but I’m stuck on what exactly I need to enter.

Variante 1
If I lower the current loan to 1% repayment, there will still be an outstanding balance of 65K€ until 10/2025 and we pay interest amounting to 7,500€.
For that, we would have significantly repaid the new loan, an outstanding balance of about 165K€, and paid about 8,750€ in interest until 10/2025.

Interest paid until 10/2025 16,250
Outstanding balance: 230K€ (65K€ at x% and 165K€ at 0.75%)

Variante 2
Repayment old loan 10%
Interest 2,900€
Outstanding balance 0 in 07/2023

Repayment new loan 3.5% until 07/2023 and 10% afterwards.
Interest 11,800
Outstanding balance 185,600€

Interest paid until 10/2025 14,700€
Outstanding balance 185,600€ at 0.75%

Is that roughly correct?

It still seems illogical to me why you would then have paid more interest but have less outstanding balance.
That would clearly make the second option better.

Unless I still haven’t quite got it yet. :)
 

Lumpi_LE

2019-04-04 15:39:26
  • #4
Well, with V2 you paid off more and consequently have a lower remaining debt, as well as paid less interest. Sounds logical and like the better option. You can also enter the extra repayments in the calculator, maybe you'll come up with a 3rd option.
 

guckuck2

2019-04-04 16:14:14
  • #5


The principle is to repay the more expensive loan first, so the old financing. If you can even replace it with the new financing, all the better. Except: the old building is rented out. Then you can deduct the interest from taxes. Possibly, the return on equity can even be increased if the old property is refinanced again to have more debt in it. Then reduce the repayment to 1%.

This is a case for the tax advisor. As a self-employed person, you probably have one on hand anyway.
 

DimaNDS

2019-04-04 16:32:10
  • #6
Yes, it should be rented out. That is a great idea! I will talk to my tax advisor. Let's see what he says. But you have made it harder for me now. :)
 

Similar topics
30.10.2008Credit vs Cash Payment15
07.08.2012The first step has been taken today50
30.04.2013Loan with an interest rate of 2.51% - Tips for financing22
20.05.2013Question: 1% repayment and 10 years fixed interest rate. Will the house never be paid off?13
18.01.2016Financing - where is the mistake?33
08.02.2016Cancel the loan and accept a better offer?37
20.06.2016Error in financing?282
25.05.2016Financing without equity - Repayment / Interest63
11.07.2016Interest rate fixation - financing assessment23
10.08.2016Assessment of financing condominium in Düsseldorf - Thank you!14
09.09.2016Which financing (type/components) should we consider?29
16.11.2018Combination of building savings bank, KFW and loan10
21.10.2019Financing with building savings loan + KfW + subordinated loan17
14.05.2020Financing Land & House - 2 Different Loans34
29.12.2020Variable loan possible / sensible?155
05.01.2021Renovation of an apartment in the parental home - loan, without being the owner?11
11.01.2021Financing offer: TA loan with building savings contract24
14.02.202210 or 17 years fixed interest rate on a 250k loan?24
13.04.2022Financing with residence abroad11
29.09.2022High interest rates with fixed interest, alternative flex loans?54

Oben