Which credit model - 15 or 20 years?

Hello everyone How is your experience / recommendation regarding the binding of the monthly salary to loan repayment? The bank has told me that up to 33% is not a problem. I am currently considering the following. I have an offer from the bank for 15 years, which would correspond to about 1/3 of my net salary, and an offer for 20 years, which corresponds to about 1/4. The interest rate difference between 15 and 20 years is currently 0.1% per year. My idea was to take the loan over 20 years and save the monthly difference compared to the 15-year rate. After 15 years, I would use the saved amount to repay the loan with a special payment. This way, less monthly is fixed for emergencies and I could benefit from rising interest rates when saving. On the other hand, the 15-year model is also feasible and annual salary increases have not yet been taken into account, so the 15-year model binds less of the salary each year. What are your opinions on this, is it better to be safe and have a lower monthly burden or rather pay off the loan faster and be free after 15 years? Thank you in advance for your opinions. muejoh

Should they each be full repayment loans? That’s how it reads at least. So after 15 or 20 years the loan is completely paid off?

Does a 1/3 installment hurt more than 1/4 or do you feel comfortable with both options? Because then I tend towards the 15-year option. The loan is significantly cheaper, not only the 0.1 percentage points, but also additional saved interest due to the higher repayment.

Thanks already for your opinion.
Yes, it is always a full repayment loan.
I feel more comfortable with the 20 years because I am more flexible for unforeseen events and can set the money aside for special repayments (I thought if I fix the interest rate for 20 years today and interest rates are rising again anyway, the savings interest rates will also rise again and thus exceed the loan interest rates in the long term, so it makes more sense to invest the money elsewhere monthly, but maybe this is too simple a thought):confused:
The 15 years are possible and don’t hurt now, we could see in recent years that we were able to save accordingly. We would then save less, which as you also say makes sense because you can repay faster and pay less interest and insurance.
Do you also have about 30% in the rate? Is that a stupid idea with the interest rates and saving?
Thanks

Hello,

as toxi has already described, you have to decide where you feel more comfortable. The problem with saving up and making special repayments is that you may end up using the saved money elsewhere. There are countless studies on this showing that special repayment rights are hardly used. You simply get used to the low rate.

Unfortunately, you did not provide details such as salary amount, loan amount, installments, and interest rates.

Therefore, I invented Mr. with a net salary of just over 4000 euros who needs a 200,000 loan with 80% collateral. Accordingly, we are talking about 2.5% interest / 5.5% total cost / 1333€ installment / 15 years or 2.6% interest / 3.8% total cost / 1070€ installment / 20 years.

After 15 years alone (without special repayments), the 20-year option is about 12,000€ more expensive than the 15-year one. For the last 5 years, about 4000€ interest costs come on top.

Both positions can of course be reduced through special repayments or repayment, but catching up so that it becomes mathematically worthwhile is definitely not possible. And I do not believe that the interest on deposits will increase so quickly and so sharply as to make your theory economically sensible. In my opinion, the probability of this is rather low.

I am always surprised that the focus here is only on having as little credit costs as possible. Before that, you also paid rent (interest) for years. You should rather think about how much money you want to have available over the next 15-20 years (besides the house payments), whether you want to take a winter vacation sometime in between, buy new furniture/car, or treat yourself to an expensive vacation! What good is it to you if you have saved interest after 15 years, but have had to hold back and make compromises for 15 years? For me personally, it would be no question at all, I would have taken 20 years and enjoyed both life AND the house....