What is the interest rate lock period in construction financing?

Oh, when we financed with about 4% ten years ago, EVERYONE said such conditions would never come again, it wouldn’t get cheaper. When we financed another house with under 2% three years ago, exactly the same. It couldn’t get any cheaper, great conditions. And where are we today.... The new contract for the follow-up financing is fixed at 0.88% for 25 years. No one can say for sure whether we won’t be back at 4% in 10 years. Who knows that nowadays?!

0.88% for 25 years?

I haven’t even gotten that for 15 years

30 years would have been 1.8% for me

May I ask how much the loan is and how much equity you have?

For me, the difference is definitely not insignificant; it’s already a matter of several thousand € up to double-digit thousands €

For 0.88% interest, a 25-year fixed interest period is a clear no-brainer

I had other offers that were significantly more expensive. I then inquired through an intermediary on the internet, who made the offer via the Allianz. I was also surprised because it was really much better than anything else. But everything is approved and the contracts are signed.

It's about a follow-up financing, the Allianz reassessed the house, the original purchase price did not matter to anyone.

I am a friend of security. We are now terminating an ongoing financing at the end of 10 years (back then we had a fixed interest rate period of 15 years) and refinancing with a fixed interest rate period of 25 years. Ten years ago, the interest rates were still significantly higher and barely anything was repaid; additionally, the new loan has to be higher. Nevertheless, the future installment will be almost €100 lower and everything will be paid off in 25 years. The offers for a shorter fixed interest rate period were only slightly cheaper, so we have the security that we know exactly what we pay and when everything is repaid.

It sounds as if the original financing 10 years ago was not manageable at all, given that hardly anything has been repaid until now and the now low interest rates are "saving" you, so that in the end it comes down to 35 years of repayment. At the interest rate level back then, the house would sooner or later have been lost.

How do you see that today with the necessary distance?

With the interest rates at the time, the house would have been gone sooner or later.

How do you see it today with the necessary distance?

It's not quite like that. Back then we only had a 1.5% repayment rate and calculated the installment so that it was manageable with just one salary. We were in our mid-20s and therefore naturally not long in our jobs.
In those 10 years a divorce happened, and the new financing is higher than the original because it includes the payout to an ex-spouse.
If the divorce hadn’t happened, the planned special repayments would have been made in the last years and the house would have been paid off after 15 years at the latest. Many things could have been different... You never know what will happen, and I’m glad it worked out this way and the house didn’t have to be sold. It’s always nice and good to make plans, e.g., to want to make special repayments, but who knows what a few years will bring and how everything will develop.

So now it just has to be financed for longer, but the house will still be paid off by retirement and one of us can manage the financing alone without problems.

Oh, how often is it even today with the low interest rates that hardly anything is repaid!? What happens then if such high amounts are still outstanding in 10 years? Of course, prices are also higher today, but I couldn’t sleep peacefully anymore with some of the projects I read about here