Assessment of financing scope for the purchase and renovation of a single-family house

Hello everyone,

we are considering purchasing an existing property from the late 1960s, an end-of-terrace house. Renovation needs are high (gut renovation), the architect’s calculation is 290 K€.
The loan amount would then be 625 K€, which seems quite ambitious to us if one income is temporarily lost due to a child. We cannot estimate how long, as it is our first child. We are a bit unsure whether we are being too cautious or if the sum is actually too high. With 3% repayment (15a), it would be about 2,150-2,200 €/month. A loan amount up to 550 K€ was actually more our wish, but that becomes difficult in the areas where we are looking. A certain buffer would be the resumption/replacement of KFW 461, which depending on the EE class would be about 30-50 K€, but currently it is completely uncertain if, when, and how high.

I would appreciate honest/realistic assessments regarding the loan amount. I hope the info below is sufficient. We have not done a detailed expense analysis but do not have an extravagant lifestyle (except quite a lot of traveling, which will no longer take place with a child).

General info about you:

[*]How old are you? 38/40
[*]Are there children? 1 from autumn, no more planned.
[*]What do you do professionally? Currently both have unlimited 40-hour jobs, etc.

Income and asset situation:

[*]What income do you have: 8,500€/net + variable shares.
[*]With only one salary (because of the child) it would be about 5,700 (+child benefit + possibly parental allowance temporarily)
[*]How much equity do you have? 400 K€
[*]How much equity do you want to invest in the house project? 400 K€

Expense situation:

Housing costs:

[*]current cold rent: 1,025 €
[*]current warm rent: 1,175 €
[*]electricity: 65 €
[*]telephone, internet, mobile phone: 70 €

Mobility costs:

[*]monthly ticket for bus and train (also for the children!): 70 €
[*]car (company car) already included in net income

Insurance costs:

[*]liability insurance (also pets): 10€
[*]pension insurance (also Riester, Rürup, etc.): 320 €
[*]household insurance: 20€

Living expenses:
No analysis made yet. Normal lifestyle, maybe 200 €/month for eating out. So far, many long-distance trips, but this will probably decrease with a child. Otherwise nothing special.

Savings:
Currently we save at least 4,500 €/month, often more.

Other expenses:
None

General info about the property:

[*]How large is the plot? 500 m2
[*]What is the standard land value? 1,300 €/m2
[*]New building, old building (year of construction), house type?: Old building 1960, end-of-terrace house
[*]Garages? 1
[*]How large is the house? (living area / usable area): 110 / 130 + 70m2 basement

Construction or purchase costs:

[*]purchase price (existing property): 660 K€
[*]additional acquisition costs (notary, court, land transfer tax, realtor): 75 K€
[*]renovation (incl. architect, etc.): 290 K€
[*]total costs: 1,025 K€

Other costs:

[*]garden, replanting, etc. initially without costs. Necessary measures already included in renovation costs.

Cost summary:

[*]total costs: 1,025 K€
[*]deductible equity: 400 K€
[*]financing amount: 625 K€

Loan inquiry:
Conditions are about 1.2% with 15a fixed interest and 3% repayment, so the rate is about 2,150-2,200 €/month.

Hello,

if the second partner is supposed to stay at home forever, then I find that borderline.
Otherwise, I absolutely cannot see any problem with it.

Hello, I see no concerns with this arrangement. 5700 net with a 600k loan. You yourselves say temporary.

I also think that will work. Will the 5700,- EUR increase if the second salary disappears (regardless of whether it is called [Ehegattensplitting] or [Faktorverfahren])? Even if not: A family of three should be able to get by quite well on 3500 + x EUR.

You might want to say something about the house again so that the projected renovation costs can be better assessed. 290 TEUR sounds sufficient at first for an end terraced house, but that does not have to be the case.

Should fit. Even with a salary, there is a lot of potential for increase when the child is in [KiTa/KiGa]. How high is the remaining debt after 15 years? It’s not that long until retirement then.

First of all, thanks for the answers. So it is already planned that after 1-2 years both will work again, certainly not both full-time. It is still a bit difficult for us to estimate at the moment, since it is our 1st child. I think it will probably come out to around 6,000-6,500+€ at first until the child is older (the 5,700€ already include [Ehegattensplitting], so the additional net income with part-time work won’t be much more).

Regarding renovation costs: The architect calculated them quite in detail after inspection. That basically covers everything (roof, façade + [WDVS], windows, entrance door remodel, adjust 2 interior walls, bathroom + guest WC, underfloor heating, heat pump, floors, plastering). We still have an almost new kitchen, which we would take with us, so only minor additional costs would arise there (we have budgeted around 5,000€). If [KfW] were to come back soon, that would be a good relief due to the high proportion of energy-related measures in the costs.