Purchasing house

36 posts in this topic

Hello All,

So we are interested in purchasing a 1971 House. The house needs renovation.  We have got an approx. estimation from our craftsman.
A meeting with bank has already taken place and we are getting following offer from the bank.

House cost    416000 Eur
NK        44000    Eur

Rennovation/Repair    80000 Eur
Modernisierung        25000 Eur

The offer is agreed upon  House Cost + Rennovation/Repair = 495000 Eur and the rest ~ 69000 will be given by us.
The Zinsen Rate which we have been offered is,

2,36% (Effectiv)    15 Years(Zinsbindung)    --->    1724 Eur Monthly Rate

Laufzeit : 35 Years
Sondertilgung 5% per annum

I would like to know if this is good offer?

The Bank agent was not in favour of KFW-Förderung as he said now the rates of which have as well increased (1,5%) and moreover it takes nearly 6-7 Months to get the approval for KFW from the authorities
and only then can the repair-work begin.
I am not sure if this will be a wise decision not to include KFW-Part here. Considering the fact that now the Zinsen have really taken a sharp uptrend in last 3 months.  :(

If you feel any other important factors I may consult with bank then please let me know.
Your valuable suggestions are much required.
Thanx.

Regards.

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Paul at Cr&Cie on this forum is an independent mortgage expert. Maybe contact him for advice/ possibly better quote?

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What is your Tilgung (not Sondertilgung)?
 

Without that information, it's not possible to even see if the rate is correct.

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The monthly rate looks accurate enough to me and is actually slightly lower than the result of the basic calculation  (€1724 vs €1760). If your % numbers are correct it doesn't look like there are any hidden fees etc.

 

I've not looked at interest rates recently but all signs point to large rises by the end of this year so a 15 year fixed term with what is still a comparatively low rate is definitely a good thing. I'd say at the moment, a long fixed term rate is definitely better than slightly lower interest rates for a short term.
It certainly makes sense to ask around and get a couple more offers though.

 

If you actually did the Sondertilgung of 5% a year (€24,800) you'd be finished by the end of year 13.

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Thanks Eric7  yes it is Sollzins/Effektiv   2,32%/2,36%. It is from reputed bank so there should not be hidden costs but still posting this in forum just gives us sense of assurety. :)

 

Moreover wanted to ask if Mortgage insurance makes sense here?  I have been told not by bank but colleagues that there is something called Risikolebensversicherung which can be adjusted to include a parameter for House-Mortgage. I am thinking of this one if it really sensible to go for. 

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We had to take out Risikolebensversicherung when buying our first house but I think the policy expired at the same time as the fixed interest did. It was a while ago and I can't really remember the details but I think it was only around €25 pm anyway.

 

For the 2nd house, it wasn't even mentioned by the bank and we didn't bother with it.

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17 minutes ago, hellocommunity said:

Thanks Eric7  yes it is Sollzins/Effektiv   2,32%/2,36%. It is from reputed bank so there should not be hidden costs but still posting this in forum just gives us sense of assurety. :)

 

Moreover wanted to ask if Mortgage insurance makes sense here?  I have been told not by bank but colleagues that there is something called Risikolebensversicherung which can be adjusted to include a parameter for House-Mortgage. I am thinking of this one if it really sensible to go for. 

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Whoops... quote system😡

Hellocommunity: you seem to be married. Are you the sole earner? What would happen financially to your spouse and/ or children if you died during the mortgage repayment?

Would they be able to afford the payments or would the bank grab the house?

A Risikolebensversicherung especially for mortgage takers is very useful and is mostly pretty economical because it it based on a decreasing death benefit over the years.

 

Disclaimer: I am an independent insurance broker and authorised advertiser on this forum.

 

 

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John g. I have been in this forum since many years. You do not have to introduce yourself, you are pretty wellknown :)

I respect the views given by you. 

I also think RV can be useful. It just that I already have got higher rates in terms of Zinsen as compared to what they were 6 months back. So additional stress to my monthly deduction in terms of Versicherung, not sure is really sensible at this time.

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8 hours ago, hellocommunity said:


Sondertilgung 5% per annum
 

 This is standard. Try to get higher % within your budget. This will help if you can save lots in an year or get any inheritance. 

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10 hours ago, hellocommunity said:

John g. I have been in this forum since many years. You do not have to introduce yourself, you are pretty wellknown :)

I respect the views given by you. 

I also think RV can be useful. It just that I already have got higher rates in terms of Zinsen as compared to what they were 6 months back. So additional stress to my monthly deduction in terms of Versicherung, not sure is really sensible at this time.

Good evening, hellocommunity!

Oh, I thought you were new and thank you for the kind words👍

I understand a budget is a budget. We all have a budget.

May I tell you a story?

My partner Nicole is 65 ( looks 25, of course❤️ ) 

Her mother was married twice - both times to successful real estate agents who sold posh houses, villas etc. She was used to dinner parties, nothing spared, wine, shopping galore etc.

 

Both the husbands had a mortgage and Nicole and her three brothers from the first marriage lived in a large house in both cases.

 

In both cases, the husband died and... in both cases, they had not discussed finances with their wives. So what happened? In both cases, Nicole's mother lost the roof over their heads and ended up moving into a small flat. 

 

Neither husband had a Risikolebensversicherung and in both cases the bank was the winner.

 

Just saying.

 

PS: on a lighter note 😂, both my 2 Risikolebensversicherungs contracts have ended and I am still alive but I am too old for a new one and so Nicole is nagging me to sort out Sterbegeldversicherung! I have a quote or two but keep putting it off ( moi? Sterben?😎)..

I hope I will not be the third example in Nicole's life!

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8 hours ago, hellocommunity said:

There is another possibility after 10 Years to payback all the rest amount. 

Yes, and that is the case due to regulation even if it´s not mentioned in your contract. That´s also the reason why some banks don´t offer longer durations than 10 years. They don´t want to grant you a free put option.

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Sondertilgung vs Tilgung: the Sondertilgung is the max extra you are allowed to pay off per yr. Banks like to guarantee themselves an income! There are also penalties to paying off early. The normal Tilgung is what you negotiate/decide on with the advisor.

 

Friends of ours like Ingdiba, you can do an online Anfrage and then have a second offer at least to compare.  (Ours was the same as our bank). Or just tootle off to the bank across the road and see? No need to accept the offers. We ended up taking 2 loans, one shorter with lower interest rates, and one longer with higher.

 

Our bank later offered us us separate, new loan for moderisation when we already had an ongoing house loan. So you don't have to get all the loans at once. Only risk is the interest rate going up, but the banks pretty much price that in to the longer term loans from what I could see. You could, for example, live in the house without renovating, and then in 1-2 yrs take a shorter term loan (gamble that the interest rate is priced in to the longer term loan), and then pay that off quicker? Maybe you can get the Förderung for the modernisation then and it balances back in your favour? 

 

So basically there are many options to taking a loan, it can be done in many smaller parts, you just have to calculate what best suit your circumstances.

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Thanks Jeba and ZA1234 for your views. Sondertilgung is a good option provided we somehow arrange the money to payoff after 10 Years. Panalties I would read the Contract-Details when I get it. 

I would be contacting second bank for comparison purpose and will also share it here.

Multiple loans is an interesting concept. But I have been told that the interest rates are going to go upto 3% to 4% in coming months. So in that case closing a deal with fixed interest rate for 15 Years is a better option. 

I somehow got little paranoid when I did not get KFW option from bank. I am thinking of contacting KFW authorities. But I have been told that it takes 6-7 Months to get approval and only then we can commence the rennovation in the house. Which is not what we want. As by then we must have already moved in new house and then carrying out rennovation part is troublesome and is not recoomended? I wonder how people solve this problem with KFW? Anyone here has this experience?

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1 hour ago, hellocommunity said:

I did not mention this but I am the sole earner at the moment in the family. 

 

Which makes John's above suggestion to consider risk life insurance even more relevant. Talking from experience.

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2 hours ago, hellocommunity said:

 

I would be contacting second bank for comparison purpose and will also share it here.

 

Just fill up the your details on online brokerage firm like interhyp, drklein etc and see what they offer. Generally they will contact you remotely and show the details through remote screen sharing.

Doesn't hurt if you can secure lower interest rate.

 

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