Are our calculations realistic? Is our construction project feasible?

Hello forum users...,

we have finally taken matters into our own hands and want to build (have built) a house.

Now I would like to ask you whether my calculation is realistic.

We are married, he is a civil servant, she is an employee.
Income: total 2700 €
Purchase price land: 65000 €
Purchase price house: 120000 €
Additional services house: 20000 €
Additional building costs: 25000 €

=230,000€

We want to run the loan for 35 years and repay max. 900€ per month.
Is that possible and realistic?
We might combine the loan with a home savings contract or an existing life insurance policy.
Equity is 10000 € which is intended to be used for furnishing. Another 5000 € has been paid into life insurance.

What do you think???

I would appreciate constructive suggestions or assessments.

Best regards
Patrick :)

With a 35-year loan repayment period, it must of course be checked whether it can still be paid off within the normal working life; as a retiree, it could become difficult.

Hello Pohnsa,

first of all, if you want to build, you should ideally have saved at least 20% equity.

To be finished with the financing in about 30 years, you should plan for a 1% repayment. Less repayment would significantly extend the term and also increase the total amount of interest and compound interest.

The life insurance serves to secure the loan towards the bank.

If I now calculate with an interest rate of only 4.5% and a repayment of 1%, together 5.5%, the following monthly burden results:

230,000,- € x 5.5% = 12,650,- €/year
12,650,- € / 12 months = 1,054.17 €/month ([Kaltmiete])

As you can see from this, in my opinion it will be rather unlikely to manage with 900,- €/month. For that you would have to get a super low interest rate.
Based on the example calculation, you can quickly recalculate yourself with the interest rates offered to you.

A second factor is of course also your age, as Wabe rightly pointed out. The financing should be completed by the latest at retirement.

My suggestion would be to first save enough equity. With a financing amount of 180,000,- €, the same calculation looks quite different. You would then have a monthly burden ([Kaltmiete] plus additional costs) of only 825,- €/month.

I hope I have been able to help you a bit with this.

Of course, we would manage to finish before our retirement age in 35 years.

The thing with the equity is of course correct from your side.
However, I am of the opinion that if I wait another 5 years and try to save €20,000, we would pay nearly €25,000 in rent in our case, which we would not get back from anyone.
So better to build now and use the small equity only for the furnishing.

Calculate with an interest rate of 4%, given the possible KfW subsidy and the low interest rates at the moment.
If you can also include two Wohnriester contracts, you end up with almost €30 more per month.

Hope my calculation works out so far...:):):):)

Hello Pohnsa,

of course I can understand that once you have decided to build, you don’t want to wait forever.

However, I would also like to point out that the €20,000 (to stick with your amount) you now have to borrow more than outweighs the saved rent of €25,000 including interest and compound interest. Those €20,000 will easily amount to between €40,000 and €50,000 in total, which means additional costs of at least €15,000 compared to the rent.

And by the way, the shorter the loan term, the significantly less interest and compound interest you have to pay overall.

Personally, I consider [Wohnriester] to be a double-edged sword. Although owning your own house also represents a kind of retirement provision, sufficient funds should be secured for living expenses in retirement. After the financing ends, i.e. after 30 years, there will probably be one or two major renovations needed. Financial means will be required for that as well.

So my advice: Don’t rush things, everything needs to be carefully considered. Building involves a lot of money.

You are right. Of course, we don't want to rush anything. But the interest rates are certainly very attractive at the moment. Actually, I must also say that we want a very long term anyway, although we are of course aware that this means significantly more interest has to be paid.

But they always say you should think about getting something of your own as early as possible.

I once read here that [Eigenleistungen] on a small house also count as equity.

Is that true???