Which financing option to choose?

Hello finance experts from the forum

Unexpectedly and therefore somewhat unprepared, we have the opportunity to purchase a house. We have approached various banks and obtained financing offers.

Two have emerged for us. However, we are now having difficulty deciding between them. Are there any tips, programs, or calculation models on how to best compare these?

We tend to lean towards option 2 but cannot really justify it or are unsure if our calculations are correct. According to these, this option appears cheaper to us if the interest rate rises above 1.6%, which we consider more likely than a further decrease in the interest rate.

We would be grateful if someone could help us.

Variante 1: Loan amount 365,000 Nominal interest rate p.a. 0.6% Fixed interest period 10 years

Variante 2: KFW part Loan amount 100,000 Nominal interest rate p.a. 0.84% Fixed interest period 10 years Loan amount 265,000 Nominal interest rate p.a. 1.02% Fixed interest period 20 years

With option 2, you are buying security. I personally think that’s good. Repay the KfW loan as much as possible so that the remaining debt is low after 10 years. Repay the bank loan at a low rate with the option to switch repayment after 10 years or alternatively special repayment rights.

With option 2 you buy security for yourselves. I personally find that good. Repay the KfW loan as high as possible so that the remaining debt is low after 10 years. Repay the bank loan with low installments with the option to switch repayment after 10 years or alternatively special repayment rights.

Thank you very much for your answer, the question is how high is the price for this purchased security. As far as we understand, KfW sets the repayment rate and special repayments are not possible. You basically mean saving in order to then repay the remaining debt after 10 years, in order to require less follow-up financing or none at all?

As far as we understand, KfW sets the repayment rate and special repayments are not possible.

Yes and no, KfW specifies a term. The repayment is then based on that. For example, you can choose a 10-year term and a 10-year fixed interest period. Then the remaining debt after 10 years = 0. Then increase the rate for the loan with the longer term.
But all of this depends on your creditworthiness/liquidity situation, and what might make sense.

You mean basically saving up to repay the remaining debt after 10 years, in order to need a smaller follow-up financing or none at all?

Something like that. Save alongside what is possible. Then you are not tied to fixed repayment installments in the financing. But people don’t always do this consistently, because there are always other expenses that are more important ;-)

I find it a bit comparing apples and oranges. Why is the combination with [kfw] used in one case and not in the other? Do you want the security for 20 years or not?