Where can I get cheap construction financing?

I LIVE IN GERMANY

Hello Geier,
good, because the flat rate for phone calls only works within Germany :-D - so, for me :)

good brokers get their commission from the investors.
with banks and the like, only talk to the boss, he gets
--no commission-- and is the only one who knows the pain threshold when
it comes to interest rates.

Well, talking to the boss is probably something only very few manage... no matter how good your reputation/SCHUFA is.
You’d probably have to have millions in your account.. but then you probably wouldn't even need a loan anyway..

the thing with the repayment 1 %
2 % repayment = 100 % increase in the repayment amount, etc.
means a lot of effort for a little less debt.
in 10 years the money won’t be worth as much as today
then pay the saved repayment in cash or by overdraft, that is cheaper
than a long contract even if the interest rates appear higher,
you save 10 years of inflation this way

I won’t name any sums of money for now, that would be too confusing - but I’ll try to explain it by example, since it might also be interesting for others.. I hope I understood it correctly, because then it really would be a cool idea :D

1. Everyone has to pay interest on the loan, and that every month

2. In addition to the amount you have to pay monthly for your loan, there is a repayment; the interest does not reduce your loan debt, but exclusively this repayment rate which is added to the interest rate.

3. The higher the repayment, the faster you get rid of your debt, but the higher the monthly installment you have to pay.

4. As long as the loans for building financing are as cheap as they are now, you assume you are best off when you pay as high a monthly repayment rate as possible, so that at the end of the fixed interest period you have as little remaining debt as possible; because the remaining sum, i.e. the remaining debt, must be re-financed after the fixed interest period, and no one can guarantee that in e.g. 10 years after the end of the fixed interest period the building loans will still be or again as cheap as they are now in 2009.

If I understand Geier’s thought process correctly, one can calculate the following trick:

If I only repay 1% in addition to the monthly credit interest instead of 2%, then I take the “saved money,” i.e. the 1% repayment, pay it into a fixed deposit account or any safe investment option with the highest possible interest rate for the duration of the fixed interest period - for example 10 years - earn interest with it, so my money works for me.

After e.g. 10 years, I will have a much higher sum remaining on my loan with only 1% repayment than if I had repaid 2%, but before I HAVE TO SIGN A NEW LOAN CONTRACT WITH NEW INTEREST RATES, I can pay off a big chunk by using the interest-bearing, reserved money, thus having to carry much less debt; advantage: I will be done faster and will have paid off my house quicker.

- What you really have to calculate well now is the following - I’ll just give a numerical example that certainly isn’t correct, but just as a clear example so everyone understands:

I pay, for example, 150 euros interest monthly on my home loan initially, and repay 1%, e.g. 250 euros monthly.
My monthly total rate would then be 400 euros.

If I repaid 2%, my monthly total rate would be:
150 euros interest + 2 x 250 euros = 500 euros = total 650 euros, i.e. 250 euros more than with only 1% repayment.

If I keep the monthly loan payment at 400 euros but invest the 250 euros “saved” somewhere with a really good interest rate - SAFE INVESTMENT!!! No stock trades or anything that can collapse! - more like a (better!) savings account, then I will hopefully have earned more money on my “savings account” at the end through interest and compound interest than I could have repaid on my loan debt with this money.

Another example:
If I still have a remaining debt of, say, 280,000 euros after 10 years with 1% repayment
and 260,000 euros remaining debt with 2% repayment after 10 years, i.e. 20,000 euros less,

I would, on the other hand - with my safe investment - be able to definitely have earned more than 20,000 euros with the contribution of 1% repayment in the same period (here 10 years), then diverting the 1% repayment into a savings investment would of course be more profitable than putting the money into loan repayment during that time.

If I could get out 25,000 euros or even more with the same money, I could have, after 10 years, not only 260,000 euros remaining debt but e.g. 250,000 euros remaining debt because I could pay that into my loan debt after the fixed interest period.

- The prerequisite, of course, is that you don’t skip any saving installments continuously, but really save consistently! Otherwise this calculation example is useless!

And you need a safe investment that guarantees you an interest rate for such a long time that it definitely earns more (guaranteed!) in the period (fixed interest period) than you would repay on your home loan with the same money.

So it also very much depends on the loan interest rate you get from the bank whether it is worthwhile for you, I think. - Therefore always have it calculated individually!

- Phew, lengthy rant, but I hope it’s clear to everyone now.
(And hopefully I didn’t say any nonsense.. Geier, help :))

hope you can follow me without detailed explanation.

I hope I understood that correctly.

ps. I have been advising my family on money matters for about 20 years
everyone has one or more houses.

Are you a credit broker or can you recommend some (Internet or from Rhineland-Palatinate)?

As soon as we know exactly how much we really need (partly we also get money from the KfW then, 50,000 euros, at 2.57% effective interest rate), I would really like to contact you, if that’s okay.

It can never hurt to hear some advice!

Thanks again for the awesome tip!

Best regards

As soon as we know how much we really need (partly we then also get money from the KFW, 50,000 euros, at 2.57% effective interest rate), I would really like to contact you, if that's alright.
hi honey cake
you have to apply for the KfW loan through the house bank or something similar, for the small amount. then pay close attention that it says that!!
the effective rate of 2.57% is also stated there, if they told you that.
but where does the KfW pay its approximately 2000 employees from, does your house bank make the application for you because today is their social day??
REMEMBER ONE THING MONEY WILL ONLY BE ABOLISHED WHEN NO ONE WANTS IT ANYMORE:
on the whole you understood the thing with the 1%, more than enough for the house.

honey cake social worker I certainly am not, answer to your question whether I am a broker.

greetings Geier

Hello Geier!

You have to apply for the KfW loan through your house bank or something similar for the small amount. Then pay close attention that it actually says so!!
The effective rate of 2.57% is then also indicated, if they told you so.
But what does the KfW pay its approximately 2000 employees with? Does your house bank make the application for you because today is their social day??

Do you mean to imply that the house bank charges you well for using the subsidized KfW loan?

So for example, if I were to borrow 300,000 from them, they might give me an effective interest rate of 4.3%; but since I get 50,000 from the KfW at a favorable rate, the bank would make me an offer for the remaining loan of 250,000 with an effective interest rate of 4.5% or something like that?

Is that what you mean?

- By the way, I think it’s really tough to get 100% loan-to-value from the bank; with good credit and everything, one can probably be glad to get 80% :(

REMEMBER ONE THING MONEY WILL ONLY BE ABOLISHED WHEN NO ONE WANTS IT ANYMORE

I have always been more in favor of a barter economy anyway.
You give/do this and that to me, in return I give/do this and that to you… I always thought that was better :)
- But you’re right, I hate this dependence on money, but what can you do.

- In this context, it occurs to me that “Schein” in “Scheingeld” means “appearance” - so a kind of “paper that pretends to be worth something…”

I’m definitely not a honey cake social worker, answer to your question about whether I’m a broker.

Hmm, I think I have to contact you by PM sometime ;)
- Even though your nickname is a bit off-putting at first glance..

When I think of Geier I think of a vulture or the federal vulture – uhhh, eagle, meaning the tax office or something :eek:

Regards