Which financing offer should we take?

Hello, we want to finalize the financing for a single-family house this week since the notary appointment for the plot is already on Monday. We plan a budget for the property including all costs 340,000 € and have 75,000 € equity capital. Furthermore, there are 3000 € available from a Riester fund pension which will then be transferred as a lump sum into a housing Riester contract for the financing. Thus, we need a loan amounting to 265,000 €

We currently have the following offers:

Bank A (house bank)

Annuity loan 145,000 € 15-year term 3.15 % 631,-€
KFW 153 program 50,000 € 10-year term 2.20 % 195,-€
Housing Riester wife 35,000 € 15-year term 3.15 % 162,-€
Housing Riester husband 35,000 € 10-year term 2.80 % 192,-€ (The contract is currently being saved up and receives a lump sum payment of 3000 € from an old Riester contract) Interest rate for the building savings loan 3.25 %
Total: 1180 €

Bank B (another local bank)

Annuity loan 130,000 € 15-year term 3.05 % 547,-€
KFW 153 program 50,000 € 10-year term 2.20 % 195,-€
Housing Riester 85,000 € 13-year term 2.70 % 372,-€ (Interest rate building savings loan from allocation 2.50 %)

Furthermore, in this option we would continue to save an existing housing Riester contract (35€ building savings amount) to repay the Kfw loan in 10 years with the building savings loan (voluntary savings rate 120€)

Total: 1114 € + 120 € voluntary savings rate building savings contract for the Kfw loan: So total 1234 €

At first glance, we would decide for option B. Do you agree with us?? Or is there any catch that we have forgotten/overlooked?

How high are the actual Riester rates together with the other Riester contracts in the two variants?

I would spontaneously be concerned that more is paid in than is actually allowed. There are limits.

Were you explained how the taxation of the Riester contracts will proceed later? At some point, everything is paid off, and then the tax office comes around with tax claims.

Personally, I am currently not convinced by the Riester home construction variants, as they contain costs that no one can calculate 20 or 30 years in advance, since tax laws will change 5 to 15 times by then.

How high are the actual Riester rates in both variants combined with the other Riester contracts?

I would spontaneously be concerned that more is being paid in than is actually allowed. There are limits.

The savings rates are about €70 and €110 for variant A. For variant B, the savings contribution is €180.

Has anyone explained to you how the taxation of the Riester contracts will be handled later? At some point, everything is paid off and then the tax office comes around with tax claims.

Personally, I am currently not convinced of the Riester home building variants, as they contain costs that no one can calculate 20 or 30 years in advance, since the tax laws will change 5 to 15 times by then.

That's true. There is, of course, some risk. But for that, I have the subsidy and the annual tax advantage of at least €450 per person for the next 35 years.

I also have no interest rate risk with the home savings loan as with the annuity loan. Here I already know that for variant B it is 2.5%.

Furthermore, as a retiree, I have a different tax rate and, for example, pay less tax on €1000 as a retiree than I do now as an employee.

Ok, including all government subsidies, you are allowed to deposit a maximum of 2,100 euros p.a. per person. You should still be far enough away from that.

Here I already know with variant B it is 2.5%.

Provided the allocation takes place on time as expected. That is not always the case. You have to pay attention to that now as well.

But I also have the subsidy and the annual tax advantage of at least 450 € p.p. for the next 35 years.

And from the 36th year on, you will then have a tax disadvantage of presumably a comparable amount.

Furthermore, as a retiree, I have a different tax rate and, for example, pay less tax on 1000 € as a retiree than I do now as an employee.

I just misplaced my crystal ball, but do you really think the tax burden will actually be lower in 35 years?
I’m just throwing in cold progression and 35 years of tax law changes... Nobody knows what will come out eventually! Nobody! Presumably, current statements (whether from banks, insurers, politicians, tax advisors or the state) will have about the same truth content as: The pension is secure! There will be no toll with me! *Insert any quote* and so on and so forth...

I can really understand your wish very well and everyone should do what they think is right. But I think absolutely nothing of this model.

Ok, you are allowed to deposit a maximum of 2,100 euros p.a. per person including all state subsidies. You should still be far enough away from that.

That is not correct! For the maximum subsidy of 154€, at least 4% of the previous year's net income but a maximum of 2100€ must be deposited. However, it is certainly legitimate to pay in more! Only then there is no higher subsidy.

That is not entirely correct either.

It is 4% of the gross income from the previous year (although that is not entirely accurate either, for those who want to know exactly: Income Tax Act - individual provision). From this, the allowances can then be deducted, resulting in the personal contribution, at least the €60 base amount.

The €2,100 is the maximum special expense deduction including allowances.

That sounds plausible. We are still far from the €2,100 anyway. So we are on the safe side regarding the limits. We will probably decide on option B, as we do not see any catch with the offer.