Assessment of construction project, financing

Hello everyone,

we are currently in the offer phase for the construction of a new single-family house and have now received a concrete turnkey offer from a local construction company, which we have forwarded to the bank. The plot of land is available and currently variably financed. We bought it in the middle of last year, and with 2.5% interest, everything would have been relatively relaxed. However, since we still had to demolish a garden shed and fell many trees, and we could not estimate the costs for this, we waited until the plot was buildable. We fluctuate daily between whether we can afford it and whether we might be overextending ourselves, as there should still be some vacations now and then and spontaneous dining out is also desired. Of course, no one can take the decision away from us, but we are definitely grateful for some input. The construction is planned in a smaller community 25 minutes from Dresden.

Our current situation is as follows:

General questions about you:

[*]How old are you? 30 and 31
[*]Are there children? 2 children, 1 year and 3 years old, no further children planned
[*]What do you do professionally? She, kindergarten teacher & he in sales
[*]Both employed, she 32 hours, he 40 hours

Income and asset situation:

[*]What income do you have (gross/net)? He 3500 € net, she 1900 € net, annual bonuses/Christmas bonus/vouchers approx. 400 €/month, but not included in household cost calculation. Salary increases are of course not excluded, but large jumps are not expected anymore.
[*]How much child benefit do you receive? 500 €
[*]How much equity do you have? approx. 70,000 € (spread across different investment classes, but available short-term)
[*]How much equity do you want to put into the house project? 50,000 € + already paid costs for the plot of about 12,000 € (broker, notary, taxes, soil survey, disposal/demolition), this still needs to be corrected in the offer below, but it does not make a big difference

Expenditure situation:

Housing costs: 790 €

[*]current cold rent: 410 €
[*]current warm rent: 540 €
[*]electricity: 70 €
[*]gas: 100 €
[*]telephone, internet, mobile phone: 80 €

Mobility costs: 370 €

[*]leasing: 120 €
[*]insurance: 30 €
[*]taxes: 0 €
[*]fuel: 50 € (annual mileage less than 5000 km/year and will not change significantly with the move)
[*]repairs: 20 €
[*]Is there a second car, motorcycle, scooter? Currently not, when we move, I will take a company car again (net burden approx. 150 €)

Insurance costs: 230 €

[*]Disability + household contents + liability + accident

Living expenses: 1900 € (keep a detailed expense book, includes everything like daycare + food, clothing, etc.) generously rounded up

[*]Groceries
[*]Restaurant expenses
[*]Personal care/drugstore
[*]Pets (food, vet, medication, stable costs)
[*]Medications
[*]Clothing
[*]Furniture
[*]Daycare/school fees (and meal money)
[*]Toys

Savings contributions: 1850 €

[*]Vacation: 300 €
[*]House: 800 €
[*]Retirement savings: ETF: 200 € + 300 € Riester (signed up naively, currently considering pausing this, current deposits of about 10,000 € are not included in the equity)
[*]Hobbies/gifts/other: 100 €
[*]150 € ETF for children (we will reduce this somewhat)

Other expenses: 475 €

[*]Loans? Plot currently 475 € (106,000 € outstanding)

Income and expenditure totals:

[*]Total income: 5900 €
[*]Total expenses: 5615 €
[*]Balance: 285 €
[*]Of which sum of cold rent and dispensable savings (e.g., savings rate for house): 1685 € (rent, plot loan, house savings) + possibly Riester contributions

General information about the property:

[*]How large is the plot? 800 sqm, previously used as garden land, but located in a legally binding development plan area,
[*]What are the measurements? 25*32 m, rectangular, flat terrain
[*]What is the standard land value? 70 €
[*]New build, old building (year built), house type? New build, pitched roof, currently planned solid aerated concrete
[*] ? "Simple" double carport
[*]How large is the house? ( / usable area) 150 sqm
[*]What is the market value of the plot and house after completion? I estimate 500 k €

Construction or purchase costs:

[*] : 108,000 €
[*]Development costs: currently the biggest unknown, we estimate 10,000 €, as some mistakes were made in the past with water & sewage connection. Currently all utilities are only in the street directly at the property boundary; in the past electricity and water came from a nearby station but were completely shut off
[*]Acquisition incidental costs (notary, court, property transfer tax, broker): in the offer only tax & notary: 5940 €
[*]Construction or purchase costs (incl. , ): current offer 388,000 € (some incidental construction costs included including earth removal disposal, internal development, painter & floor coverings)
[*]Incidental construction costs + partially exterior facilities, driveway already existing: 17,000 € + 10,000 € development included in the offer
[*]Total costs: 529,691.31 €

Here we are currently considering where we can still save, but even with less living space and possibly renouncing some "luxury" things like bay window, chimney, large lift-and-slide door, aluminum front door, etc., I see a maximum savings potential of 15,000 €-20,000 €, because you still somehow want it to be as you imagined it. I might also write something about this in the floor plan forum.

Other costs:

[*]Kitchen costs: 10,000 €-15,000 €
[*]Furniture, lamps, decoration: we will have to take some initially, 4,000 €

Cost summary:

[*]Total costs: 530,000 €
[*]Deductible equity: 50,000 € + 5,940 € incidental costs + 2,000 € own contribution
[*]Financing amount: 472,000 €

Necessary loan details:

Loan 1

[*]Loan amount 372,000 €
[*]Classic annuity loan
[*]Interest rate (p.a. nominal, otherwise effective), 3.87 % effective
[*]Fixed interest period 20 years
[*]Remaining debt at the end of the fixed interest period: 260,944 €
[*]Fictitious total term until full repayment 41 years
[*]Initial repayment rate: 1 %
[*]Monthly installment: 1,484.90 €
[*]Special repayments possible? (Specify amount) 5 % annually. To be roughly finished before retirement, we would have to make about 3,000 € special repayments in 15 of the 20 years
[*]Repayment rate change possible? 2 changes possible

Loan 2

[*]Loan amount 100,000 €
[*]SAB Family Housing
[*]Interest rate (p.a. nominal, otherwise effective), 0.75 %
[*]Fixed interest period 25 years
[*]Remaining debt at the end of the fixed interest period: 0 €
[*]Fictitious total term until full repayment: 25 years
[*]Initial repayment rate: 4 %
[*]Monthly installment: 395 €
[*]Special repayments possible? I think possible, but not sensible due to the interest
[*]Repayment rate change possible? No

In total, we are at 1,880 € + additional costs, which is a little over 30% of the income without child benefit. Some saving and spending points will definitely need to be re-planned. My current view is that we initially pay about 1,200 € in interest per month, a reasonable 4-room apartment with over 100 sqm costs over 1,000 € cold rent in our area, and whether I now transfer the money to a landlord or the bank is basically the same at first, although as a tenant you do not have to build reserves for repairs, etc. but also do not have the house lifestyle.

The alternative would be to wait for better conditions at the interest rates or to finish preparing the plot and then sell it again. With construction prices, I do not see any significant long-term price drops.

Thank you very much in advance to everyone who has read this far and wants to add something.

First of all, a compliment: you filled out the questionnaire immediately, and in my opinion you also have a very down-to-earth view of things. The house is not huge, the kitchen planned with reasonable money – basically, I don't see any major blunders. I would still include a certain buffer in the calculation. The problem without a buffer and without adjustment options to cushion is that in the case of unexpected additional costs, a refinancing is necessary, and that is often very expensive.

Otherwise, we are financing under similar conditions and sleep quite well at night with it. However, we have prospects for salary increases in the long term. You hadn't really seen that for yourselves – nevertheless, over 20-30 years at least an inflation adjustment will play into your hands a bit. Because your loan remains the same.

I could imagine that working out.

Does SAB Familienwohnen not necessarily have to be combined with a KfW funding program? Unfortunately, we did not receive Familienwohnen back then (), but I don't think the conditions have changed, have they?

Hello,

we are buying, but come to a similar rate (1800 euros + 200 private loan). However, it will only take between 20-25 years, and we are in our mid-20s. Hamburg income is also within that range (3800 + 1300 + special payments), children planned.

Simply from the comparison: the combined repayment of 1.6% is borderline but acceptable. From the household budget and expenses, I also find it appropriate, since: "davon Summe Kaltmiete und verzichtbare Sparleistungen (z.B. Sparrate für Haus): 1685 € (Miete, Kredit Grundstück, Sparen Haus) + ggf. Riesterbeiträge".

The interest rate situation is currently simply difficult, it might make sense to wait and see if the rate is lower in 1-1.5 years – then prices could also rise.

All in all, I would probably do it.

Does SAB Familienwohnen not have to be necessarily combined with a KfW funding program? Although we unfortunately did not receive Familienwohnen back then (), I think the conditions have not changed, right?

I just spoke with the advisor again and according to her statement, this is a nice-to-have provision, but not mandatory. The conditions of the supplementary loan from SAB or KfW are also significantly worse.

I just spoke again with the advisor and according to her statement, this is a would-be-nice provision, but not an obligation. The conditions of the supplementary loan from SAB or KfW are also significantly worse.

OK, then everything is fine - as always with SAB, what is written differs from reality...

The supplementary loans are of course very bad in comparison. But maybe your project can meet the conditions for KfW 297? The conditions there are interesting again - provided it is basically feasible for you from a construction perspective.