Which building financing would you recommend to us?

Hello everyone,

for a purchase amount of €250,000 for a property, we have received the following financing offers and would be very grateful for your feedback/recommendations:

Option A)

€50,000 via L-Bank loan (Living with child)
Fixed interest period 10 years
Monthly rate €205.67 at 1.45% p.a. (Effective 1.46%)
Remaining debt after fixed interest period €33,252.64

€150,000 MHB loan
Fixed interest period 25 years (Option for special repayments annually €7,500 - it won’t be that much, but we wanted to make €3,000-5,000 annually since rental income will be generated from the property)
Monthly €642 at 2.038% p.a. (Effective 2.08%)
No remaining debt

and

€70,000 as a direct bank loan (special repayments possible up to €7,000 annually)
10 years fixed interest at 1.59% (effective 1.62%)
Monthly rate is €252.32

Total monthly burden we actually wanted to be only €1,000 – here it would be €1,100.

Additionally, we would have to consider what to do with the remaining debt of KFW and bank loans after 10 years... Is it sensible to service a home savings contract? How high would the monthly costs be then? Actually, we are already over our price expectation for the monthly budget.

Here is the Option B)

€50,000 via L-Bank loan (Living with child)
Fixed interest period 10 years
Monthly rate €205.67 at 1.45% p.a. (Effective 1.46%)
Remaining debt after fixed interest period €33,252.64

€20,000 via KFW loan No. 159 (Renovation)
Fixed interest period 10 years
Monthly rate €98.15 at 1.20% p.a. (Effective 1.21%)
Remaining debt after fixed interest period €11,004.79

Bank loan of €200,000
Fixed interest period 15 years
Monthly rate €800 at 2.060% (effective 2.10%)
Remaining debt after fixed interest period €103,780.33
Special repayments possible – up to €7,500 per year

Here, too, the question arises how best to deal with the remaining debts after the fixed interest periods of 10 and 15 years???

Which option do you consider better and why?

The purchase price is €250,000, we only have equity for incidental purchase costs such as real estate transfer tax, notary, and land registry fees. The additional €20,000 we want to use to renovate the bathroom, create a small shower bath, and partly renew the kitchen. Hence the bank’s suggestion for Option B with the KFW loan.

Thank you very much for your assessment.

Save up 11k remaining debt KfW! It's a piece of cake! And make the bank loan over 15 years. Have you ever spoken to an intermediary? What does the income look like? What rent should be paid?

Hello, what is meant by Vermittler? Various local banks have inquired and now picked out the best offers from our perspective. Some banks did not want to finance us because we want to buy a "special property" (significantly more commercial space than privately used space). The commercial rentals generate a net monthly rental income of 1500 euros. Gross equity for 2 people 61,000 euros/year. We renegotiated again today and ended up with option A with a loan of 150,000 euros at 1.871% for 20 years. We have not committed yet, as we are still waiting for an offer from Postbank. The remaining framework conditions would remain the same.

61k gross is how much net? I earn 80k alone and only finance 200k. Apparently someone wants to finance you even though everything is based on rental income. Take the financing and don’t complain when it collapses.

61k gross is how much net? I earn 80k alone and only finance 200k. Apparently someone wants to finance you even though everything is based on rental income. Take out financing and don’t complain when it collapses

That can work. €61k gross can be roughly €3000 net. Saving probably wouldn’t be possible then.

However, I wonder where you can get €1500 commercial cold rent from a €250k property. It’s really a mystery to me. I’d like to have that yield too :p

That can work. €61k gross can be roughly €3000 net. Saving would probably no longer be possible.

However, I wonder where you can get €1500 commercial cold rent from a €250k property. It's really a mystery to me. I would like to have that return :p

in BW

but that's true it doesn't really add up, I won't address that now^^