Kfw loans – taking advantage of government subsidies

In the context of construction financing, it often makes sense to apply for a low-interest KfW loan

In many cases, construction financing consists not only of one loan, but several loans can be combined with each other. This includes, for example, annuity loans, a building society loan as well as a repayment loan. In addition, KfW loans are particularly interesting, because the government subsidized loans are characterized by low interest rates and sometimes even a repayment subsidy.

What is a KfW loan?

The Kreditanstalt für Wiederaufbau, or KfW for short, is a state development bank. It has the task of financially supporting large parts of the population through certain measures, such as low-interest KfW loans. These are given as student loans, for example. One area deals with real estate owners, because it is precisely there that the KfW Bank has launched several funding programs. In any case, these include a particularly favorable interest rate and sometimes the borrower even receives a repayment subsidy.

Which KfW programs are eligible?

For borrowers and thus (future) property owners, there are several KfW programs that come into question. Particularly interesting are certainly the funding programs of the KfW Bank, which relate to energy-saving houses and energy measures, such as renovations. The easiest way to find out more is to first visit the KfW website. There the individual promotion programs are not only presented, but middle details relatively in detail explained.

A small overview of the state subsidized loans, which fall on the part of the KfW Bank in the area of real estate ownership, can be found in the following list:

Conditions, requirements and when you are entitled to the relevant funding program, you can see directly on the website of KfW under the relevant funding program.

 

How to apply for a KfW loan?

If you have determined that one of the KfW programs is suitable for you and you meet the relevant requirements, the question arises as to how you can now apply for the loan from the KfW Bank. The procedure is relatively simple, because you only need to find a bank that cooperates with KfW. Perhaps this is already your house bank, through which you can apply for a KfW subsidized loan.

In practice, the procedure is as follows: you apply for the KfW loan at your bank and the bank forwards the loan application to KfW. Your application will be reviewed there and the KfW Bank will ultimately decide whether or not to approve it. The further processing and the disbursement of the loan then run again via the house bank, which is quasi a kind of transitory item. The application of the national promotion loans is relatively simple and usually goes also quite fast off.

Note: There are some KfW funding programs that are eligible for both property owners and home builders. You should definitely take the opportunity to take a closer look at some of these programs, because especially the low-interest KfW loans have some advantages.

What does the subsidy consist of??

The details of the subsidies for the relevant KfW loans depend on the subsidy program in question. In most cases, the subsidy consists of the fact that you receive the KfW loan at an extremely favorable interest rate. Although the loan interest rates for mortgage loans have also been at an extremely low level for years due to the low interest rate situation, the interest rates for mortgage loans are still very low. The KfW loans are sometimes even slightly cheaper, so that you can sometimes save interest costs in a direct comparison with annuity or amortization loans from the banks.

In addition, some KfW loans also include a so-called repayment subsidy. This means that you will effectively be "given" a larger amount – albeit subject to certain conditions – which you can use to repay your real estate loan. Depending on the KfW program, this involves repayment subsidies between mostly 5.000 to 10.000 euros. The requirements are often that you have to achieve, for example, through certain measures, that your house has a certain energy efficiency class.

Tip: You should inform yourself in any case about the possibility whether you can include a KfW loan in your construction financing. If the information on the KfW website is not sufficient for you or you do not understand it in its entirety, you should seek advice from your bank. KfW also provides information on questions – but only by telephone or e-mail.

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