Which subsidized mortgage (KFW) if you could pay cash

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GermanDoc
Posts: 23
Joined: Tue Sep 10, 2019 4:48 am

Which subsidized mortgage (KFW) if you could pay cash

Post by GermanDoc »

In about a year I will have the opportunity to buy a newly build condo at a good price.

I could buy it all cash. BUT for the acquisition of energy efficient homes a state owned bank (called KFW) offers subsidized loans up to 120k with a repayment subsidy of 30k with one of the following options:

First: 10 year fixed 0,75 % interest, up to 10-30 year repayment duration, no unscheduled repayment allowed.

Second: 10% fixed at 1%, only interest payment for 10 years, then in year 10 it must be repaid at once, I think it's called a bullet loan. (Payment would be 120-30=90k)

If your plan was to make best use of the effective negative interest rates and maximize your investments in index funds, which option would you choose and why? (Give you want to buy the condo and are eligible for the subsidized loan).
90/10: 36% Vang. developed wrld., 13,5% Vang. EM, 13,5% Vang. EM Bonds, 13,5% SPDR Wrld SC, 13,5% Xtr. Wrld Value, 10% AGGH
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