802k€ for house including additional purchase costs with 600k€ loan - Financeable?

My advice: Under the given conditions, a better and smarter solution than the 600k loan can certainly be found. Point 1: You cannot afford the 600k loan based on your net income - also considering 1 child. I see 400 to 500k there. Basically, depending on your risk tolerance, it is of course possible and also sensible to hold back equity capital, provided you expect the return on the retained equity to be above the loan rate. As already mentioned, however, you cannot afford this additional loan from your net incomes. Point 2: Why 600k with almost 40 years term? Bring in more equity! I would aim for 400 equity / 400 loan or even 450 equity / 350 loan. How about, for example, a private loan from the parents? To reach 400k equity, for example. Advance gift? You just have to bring that up under these conditions. 350k loan means a very moderate rate, with low risk. Use the additional room in the monthly income to further diversify the portfolio alongside the house. Point 3: Renovation costs? 1983 is also no longer the youngest year of construction. Not that another 100k will be necessary in 10 years.

One must always, in my opinion, see both sides of a coin. On the one hand, a household net income of €4800 is not particularly great for a household of academics over 30; especially not in BaWü and in a location where a 30-year-old 140m² semi-detached house costs three-quarters of a million. Nevertheless, there seems to be enough - however generated - equity and, much more importantly, a solvent backup in the background. The question to be answered is: do you want to live "at the expense of others," at least with this dependency, knowing that it would not have worked with your own equity power?

Point 2: Why €600k with almost 40 years term?

He already explained that. Because the invested equity currently yields more dividend than the cost of debt would. I find that understandable now.

Applause, applause!

And again, read carefully: He neither wrote that his portfolio was worth 210k, nor that he wanted to invest a maximum of 70k. And you know what? I don’t care at all when people add things that simply aren’t there. Just read it properly: I only suggested contributing more equity because it is possible and reduces the risk – and that even only as another option. I wouldn’t liquidate anything from the portfolio here – that is also in my post.

But maybe it’s misguided of me to discuss finances with someone who has been paying off their loan for three years. You can’t beat such experience with simple math.

How do you interpret this statement?

[*
How much equity do you have?
[LIST]
[*]approx. €210,000 (+ 2 paid-off cars, according to Mobile.de: Car 1 still worth about €25,000, Car 2 still worth about €8,000)
[LIST]
[*]of the €210,000, approx. €30,000 is held as an "emergency fund" in the savings account, the rest is invested


[*]From the parents there is a total of approx. €130,000 for the house purchase

[*

How much equity do you want to put into the house project?


[*]approx. €130,000 from parents + approx. €70,000 own equity = €200,000

I read there €210k (portfolio + cash) + €130k (parents), of which €70k own and the €130k from the parents are to be invested. That means he can use more equity but doesn't want to because it is invested.

Hence also my question, why do you assume that?

Total volume: €800k

Equity:
€210k available
€130k coming from the parents
€25k the car contributes
===============
€365k equity

In addition, the original poster is calculating with an income that he will not have with a child and with current expenses that will also be higher in the future because of the child.

If you want to calculate for the next 30 years, then please use realistic income and expenses for the next 5-10 years.

I always find it difficult or even presumptuous to evaluate other salaries or, as you do, to belittle them.

It depends on the overall situation; maybe both work in the public sector and receive VBL, etc., or there are people who enjoy their job or only work to live and not live to work :)

Just as a benchmark, with €5294 as a couple, you belong to the top 10% in Germany, with, for example, VBL you would easily be in there.

But as I said, simply evaluating salaries without context doesn't make sense.

The fact is that there is probably a maximum of €230k equity available here + a large inheritance in the mid six-figure range expected in the next 10-20 years, so where is the problem? If necessary, they can just sell after 10-15 years.

I don't find the situation existentially threatening now.

How do you interpret this statement?

[*
How much equity do you have?
[LIST]
[*]approx. €210,000 (+ 2 paid-off cars, according to Mobile.de: car 1 still worth approx. €25,000, car 2 still worth approx. €8,000)
[LIST]
[*]of the €210,000 approx. €30,000 is kept as an "emergency fund" in the savings account, the rest is invested


[*]From the parents, there is a total of approx. €130,000 for the house purchase

[*

How much equity do you want to put into the house project?


[*]approx. €130,000 from parents + approx. €70,000 own equity = €200,000

I read that as €210k (portfolio + cash) + €130k (parents), of which €70k own and €130k from parents are to be invested. That means he can use more equity but doesn’t want to because it is invested.

Hence my question, why are you assuming this?

Total volume: €800k

Equity:
€210k available
€130k coming from parents
€25k comes from the car
===============
€365k equity

Furthermore, the OP calculates with income which he won’t have with a child and with current expenses which will also increase in the future due to the child.

If you want to calculate for the next 30 years, then please use realistic income and expenses for the next 5-10 years.

He wrote that the €210k is the entire portfolio and he wants to invest a maximum of €70k.

No, it’s €180k portfolio and €30k cash. He writes that he wants to invest approx. (!) €130k from the parents and approx. (!) €70k own capital – which probably means partial liquidation of the portfolio, which you previously denied here.

I, on the other hand, assumed nothing – I merely noted that there is more equity available and said that I (!) would use part of it to reduce the installment and lower the risk. And I would even do that without liquidating the portfolio. I just wanted to show that by liquidating the portfolio even more equity COULD be generated. Nothing more, nothing less. And you claim that I am coming up with a theoretical construct. None of that is theoretical.

As we have all noted, the salary in view of the volume is at least questionable. There is often no possible solution in such situations – here there is one, so it is legitimate to point that out.

OP has equity if he does NOT want to liquidate his portfolio:

- €130k from the parents
- €30k cash
- approx. €108k portfolio value (lending value 60%)
- €25k from selling the car
= €293k

That is workable. Whether the OP wants that is another question – but even there I wrote that I do not know if it is the best idea if "growing money" is the hobby.

Also, you overlook that the OP does take into account reduced income and increased costs when a child comes. It’s all in his first post – as well as the planned sale of the car – I don’t just make all that up.

I always find it difficult or even presumptuous to evaluate other salaries or to belittle them as you do.

I "evaluated" based on the facts provided. Whether 4800 including AT allowance monthly for 2 over-30 full-time academics is good or not, everyone can judge for themselves. Considering the region and capital requirements, I still see potential (which neither fundamentally nor under the given "external" conditions necessarily has to be utilized).

maybe the two also work in the public sector and get VBL etc.

One can speculate often and a lot, but in this case, thanks to the very extensive initial post, not here. Just read it, then you can save yourself the "maybe".

Just as a figure, with 5294€ as a couple you belong to the top 10% in Germany

The median household net income without children in BaWü was around ~4,200€ in 2018. If we base it on the development since 2012, we end up at ~4,300€ (worst case) and ~4,600€ (best case) in 2020. So in 2021 with 4,800, we are rather 10-15% above the median, not the 40% you mentioned (where by the way boom regions like Saxony, Saxony-Anhalt, Thuringia, Mecklenburg-Vorpommern, and Brandenburg have an influence).

But as said, simply evaluating salaries without context makes no sense.

The "blunt" context that first needs to be evaluated: Is 4,800 net sufficient for still childless full-time employees to finance 600,000€? Usually rather not.
But this is also not the case here. As long as the external sources are secured, in my opinion, there is nothing against it. If one wants to make oneself dependent on those.