More than an interest rate
Why the right mortgage is more than the lowest rate. All the building blocks a holistic consultation must consider.
Why interest isn’t everything
Most comparison portals put only the interest rate in the foreground. That is reductive — and expensive. A truly good mortgage is the sum of many building blocks, all of which have to fit the individual life situation.
A 0.1% lower rate can quickly be undone by the wrong repayment, missing special-repayment options or unfavourable valuation clauses.
What a holistic consultation covers
Fixed-rate period & term
5, 10, 15, 20 or 30 years — depending on the rate environment and life phase. A longer fixed period gives security but costs an interest surcharge.
Initial repayment rate
2% classic, 3–4% better in the current rate environment. The repayment rate determines the remaining debt at the end of the fixed period — critical for follow-up financing.
Special-repayment right
Typically 5% per year without a surcharge, some banks 10%. Important when an inflow of assets is expected (bonus, inheritance, sale).
Repayment-rate switch
Adjust the repayment rate free of charge 2–3 times during the term — useful during parental leave or self-employment.
KfW combination
A development loan + bank loan combined reduces the overall rate. Application order: KfW BEFORE the purchase contract.
State funding
L-Bank BW, LfA Bayern, NRW.BANK, WIBank Hessen, SAB Sachsen — often combinable with KfW. Little known, big effect.
Loan-to-value tiering
60% < 80% < 100%: each tier is cheaper. Position your equity strategically.
Follow-up strategy
Think about the follow-up financing already at the first financing: when does the fixed period end? Agree a forward option as well?
What belongs to a mortgage
- Term life insurance or occupational-disability insurance: not mandatory, but sensible for families
- Residual-debt insurance: often expensive and unnecessary — term life is usually cheaper
- Buildings insurance: mandatory for the bank, prove it before payout
- Natural-hazard insurance: especially important in high-risk areas (flood, storm)
Note: insurance recommendations are not insurance advice. I broker property financing under §34i GewO, not insurance.
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