Assessment of financing a house construction on an existing plot

Good day,

my partner and I plan to start building a single-family house on our equity-financed building plot (966m², some trees still need to be cleared from the plot) northwest of Berlin at the beginning of 2025.

Due to the current situation regarding construction costs and interest rates, the question now arises whether we should approach the project more concretely now (provided it is financially feasible) or rather wait a bit longer. Although our income situation currently looks quite okay from my point of view, there remains the concern that the situation could become financially tight with children.

I would be very happy to receive feedback. Many thanks in advance.


General information about you:

[*
Who are you?
[LIST]
[*]Unmarried couple


[*]How old are you?


[*]both 31 years


[*]Do you have children?


[*]No


[*]Are children planned?


[*]2 children


[*]What do you do professionally?


[*]Civil servant in higher service
[*]Automotive industry


[*]Are you employed, self-employed, retired, housewife, househusband, etc.?


[*]Civil servant and employee


[*]How many hours do you work?


[*]40h and 40h

Income and asset situation:

[*
What income do you have (gross/net)?
[LIST]
[*]M: 4,102 euros net & tax class 1
[*]W: 3,600 euros net & tax class 1


[*]How much equity do you have?


[*]approx. 100,000 euros plus the existing building plot (966m² with only 30 € official land value, as it is a rural area, local connection through family)


[*]How much equity do you want to invest in the house project?


[*]90,000 + can the plot (proportionally) be included as equity?

Expense situation:

Housing costs: => 914

[*
current cold rent
[LIST]
[*]580


[*]warm rent with electricity


[*]850


[*]phone, internet, mobile


[*]45 internet
[*]18.36 broadcasting fee

Mobility costs: => 625

[*
savings rate for new car
[LIST]
[*]100 (estimated)


[*]insurance


[*]60


[*]taxes


[*]15


[*]fuel


[*]400


[*]other


[*]50 Deutschlandticket

Insurance costs: 410

[*
private health and nursing care insurance
[LIST]
[*]285


[*]liability insurance (also pets)


[*]5.50


[*]disability insurance


[*]80


[*]household insurance


[*]10


[*]legal protection insurance


[*]30

Living expenses: 925

[*
groceries
[LIST]
[*]500


[*]personal care/drugstore


[*]100


[*]pets (food, vet, medication, stable costs)


[*]100


[*]clothing


[*]100


[*]club fees/gym


[*]none


[*]TV/video/audio/CDs/DVDs


[*]20


[*]donations


[*]none


[*]hairdresser


[*]20


[*]mobile phone


[*]company mobile phone
[*]private mobile phone: 30


[*]other


[*]bank: 5
[*]gifts: 50

Savings: 100

[*
vacation
[LIST]
[*]100


[*]house


[*]none


[*]retirement provision


[*]nothing specific


[*]other


[*]difference is saved

Other expenses:

[*
maintenance payments?
[LIST]
[*]none


[*]loans?


[*]no

Income and expense totals:

[*
total income: 7,700
[*]total expenses: ~3,000
[*]balance: 4,700 (plus 580 rent)



Construction or purchase costs:


[*]land costs
[LIST]
[*]already owned: 966 m² acquired for about 45,000 euros through contacts, building obligation until end of 2027


[*]ancillary acquisition costs (notary, court, land transfer tax, broker)


[*]does not apply?


[*]construction or purchase costs


[*]house price: 450,000
[*]extras: 10,000
[*]incidental construction costs: 90,000 (including plot clearing, items for kitchen, etc.)


[*]total costs


[*]=> 550,000

Cost breakdown:

[*]total costs: 550,000
[*]deductible equity: 100,000 + plot proportionally?
[*]financing amount: approx. 450,000

Necessary loan details:

[*]interest rate: 3.5%?
[*]repayment: planned probably 1.5, option for special repayment 5% would be desirable for us
[*]monthly repayment ~ 2,000

Open questions:

[*]Assessment whether financially bearable or are we overextending ourselves?
[*]Financing with planned children? How to consider possible loss of income?

Equity + [Grundstück] is solid after all! Keep the savings rate and by the time the first child arrives there should be another €50,000+ available.

Ongoing costs ([Kredit] + additional costs) of €2,000-2,500 are just over 40% during parental leave (€4100 + €1800 + €250 = €6,150), which in my opinion is still manageable with that salary and could be covered by both salaries in case of a complete loss of one partner's income.

Savings rate for car and vacation seems a bit low to me, but that won't be a dealbreaker.

Solid salary, good starting position. Yes, the paid-off property counts as equity!

Hairdresser

[*]20

Then just ask your wife.

You don’t consume much, you can see that from the remaining equity. Still, one should calculate how long one has to save to buy a realistic used car

Savings rate for a new car)

[*]100 (estimated)

Even though I consider some numbers unrealistic and children will then also be an item, I think without precise calculation that everything can be quite relaxed. However, I would not keep the repayment below 2% and then keep it flexible. No one uses the offered 5% anyway, because: something always comes up.

Although not occupational disability, I would cancel a BU for 80.--€ or increase it to a realistic value. However, a civil servant does not need BU but an incapacity for service insurance.

What do you base that on? If you start paying into a [BU] early, the contributions usually remain low.

Although off-topic, I would cancel a disability insurance for €80 or increase it to a realistic value.

Today, you can get a decent policy from a reputable provider with about €3,000 monthly payment. If you are young and healthy or do not work in a high-risk profession. That might have been the case for the OP.