Advice needed - Build or continue saving?

Good day,

I hope I am in the right forum here and can count on your advice.

Initial situation:
We (my wife and I) earn a net total of 4000 euros and unfortunately only have equity of 50000 euros.
The planned house purchase (prefabricated house) including land should cost a maximum of 370000 euros. ([Area Landkreis Miesbach / Bayern - here the land prices are unfortunately very expensive.])
Thus, we would need a loan of 320000 euros.
We want to repay 1300 euros monthly.
We have already been to two banks, both offered an effective interest rate of about 3.6%, repayment 1.5%.
We currently pay about 700 euros cold rent.

We are now a bit uncertain whether we should save another 50000 (that would take us 4-5 years) and then build. The bank advisor also mentioned a building savings contract ([Bausparvertrag]) (maybe that would be something??).

As you might be able to tell from my sentences, we are still beginners in this area and thus uncertain and do not want to do anything wrong.

We would be very happy about opinions.

Best regards
Suedi

Hello suedi,

in general, one can only say that the current mortgage interest rates are at a very low level and it can be assumed that they will have risen significantly again in 5 years.

A loan with a term of 5 years (which I would not recommend) can already be obtained today for well under 3% effective interest.

Whether you can afford to build today is, of course, very difficult to answer... since the topic of [Eigenleistung] was not mentioned at all in your post. If you have €50,000 in equity and can also provide some [Eigenleistung] for a new build, then the situation looks completely different again.

As a tip, I can only give you from my own experience... to get offers both from your house bank and from online banks before concluding a construction financing.

Many greetings Kasper81

Hello Suedi,

I am in a similar situation. The numbers are almost identical for us. However, I want to save even more. The reason: with the loan and the repayment, it takes 34 years to pay off. Every month 1300 euros. Plus additional costs. Total interest expense is almost a quarter of a million. Can you somehow save even more? With 150,000 EUR equity, everything already looks much better. With 100,000 EUR more, you would only repay for 17 years. Total interest expense would be 80,000 EUR. For this reason, I would save as much as possible over the next 5 years. After a certain loan term, you almost only pay interest!

I think it's hard to judge whether it will work out with the income and the equity, or whether you should wait another 5 years. I don't know if you otherwise lead an expensive lifestyle, have children or are planning to, which would mean a salary is lost, or if you live very ascetically. We have a bit more monthly income and also more equity, but we have 2 children with monthly expenses and we are now starting to build. The loan amount is a little higher for us and we also pay more interest than you (3.9% and 4.1% for different terms). We once made a household budget where we recorded our expenses over months (fixed costs for insurances etc., expenses for food etc...) and realized that it fits for us and we still have a little bit of room to save on the side (building savings contract and special repayments). Maybe that would help you?