Best financing option for full financing?

Hello everyone,

my girlfriend (29) and I (30) plan to buy a home. We have already found the suitable property. It is a newly built semi-detached house; loan amount approx. 380,000 EUR.

A brief overview of us:

Net income her: 1,800 EUR
Net income me: 2,750 EUR
Desire to have children: yes

The incidental costs for the purchase would be covered by equity, so we would be talking about 100% financing.

Because of our desire to have children, we have set our monthly payment at 1,000 EUR. Annual bonus payments make the issue of special repayment obviously important.

Another not insignificant detail is that I already own a home. My parents have decided to transfer their fully paid-off single-family house to me before their hopefully still many years away passing. The lifelong right of residence should therefore be clear. Nevertheless, I think that the home could have a positive impact on our financing request.

If you need any further information to be able to give us advice, I will of course be happy to answer.

Thanks! & Best regards

Hello, the only positive thing would be to register an additional security on the house so that you get a better interest rate. A right of residence represents a prior burden, which means the mortgage would be subordinate. Whether banks view this positively, no idea.

If you can use the parents' house as collateral, it will improve your conditions.

However, your loan amount is not realistic for the desired rate. Assuming 2% initial repayment and 2% loan interest, you are already at an annuity of €15,200 or €1,266 monthly. Even if you choose a shorter fixed interest period and, for example, pay 1.5% interest, you are still over €1,100 per month.

Loan amount far too high for your intended installment.

With 100% financing, the interest rate will probably be around 2.5% p.a., I suppose. Ideally, one can afford an initial repayment of 3% nowadays. Thus, 380,000 * (2.5 + 3)/100/12 = 1742 euros would have to be paid monthly.

The existing house will of course reduce the loan-to-value ratio (if a land charge is registered) and thus improve the interest rate. But due to the right of residence, the realization potential (from the bank's perspective) is reduced. In this respect... one would have to see what the bank says. (We do not know the property, after all ...)

With your salary alone, I don't see the numbers working. New constructions without significant equity are rarely a good idea. If I were you, I would play it safer.