Budget 600-800k with approx. 10k net household income?

Wow, I’m just surprised by the number and quality of the friendly responses in such a short time. Big thank you.

May I ask again, why? Why property? Why a house?

Ah, I knew I had forgotten something. Good point. Yes, we are not buying because it’s a matter of the heart and we both have always wanted to own a house. We would also continue to rent. At the same time, we have very specific ideas about the location. And, surprisingly, there is simply nothing to rent in this area. And if there is, the rents are very high, you have to expect rent increases, etc. The alternative would be to move further out. Then you could probably rent more relaxed and be in a better situation (able to choose an apartment/house, move out if necessary and rent elsewhere, less worry about increases, termination for own use, etc.) In summary, our “problem” is that we want to stay near the big city. Oh, and the fundamental “why” is also that we want to offer the children a nice room each and a nice area to grow up in. We could probably live more modestly ourselves. But from 4 rooms in an acceptable area, it inevitably gets expensive, whether rent or purchase.

I would choose the A location. You are in such a financially comfortable situation that it’s only about life satisfaction now. The "few euros" (in your situation) you save by going for the B location are not worth giving up the nicest spot.

Thanks for the input. Yes, I often think that too. In both scenarios you spend a lot of money. It would be a shame, or almost dangerous, if you (to save money) are unhappy and still have a considerable amount "on your back."

That is a very comfortable situation. Provided there is a bit of willingness to take risks.

I’ll go straight for it:
880k - 200k equity = 680k to finance. (75k equity kept in reserve)
With the above assumed numbers, this would result in a monthly payment of about €3,860.

Even if I only assume €9,000 net household income, there is still just over €5,000 left for living and saving.

€5,000 is a number many can only dream of!

Thank you very much. That gives courage. Somehow, from the numbers it also makes rational sense to me that we can afford it. On the other hand, I then think we can’t really spend 3,800–4,000 on a loan? “Who does that? That’s two net salaries,” and you haven’t even factored in ancillary costs yet. Somehow it sounds surreal.

Way too much time wasted on text ;)

You can afford whatever you want (at least almost). The only question is whether you want it.
But if you live a minimalist lifestyle, why work so much and not also spend the money sometimes?

Banks welcome such privileged customers with open arms. Whether you want to finance 500k, 750k, a million, or more.

Well, we do spend money but many hobbies don’t cost that much. We also spend little money on clothing. Fortunately, my wife doesn’t buy brand clothing. But I probably have to take another look at the expense calculation. I calculated a bit more pessimistically this morning. For example, a line item for “improvements and projects” is missing, which should be considered when you have a house and garden.

I think so, too,

You can also afford the A location. (By the way, I would choose the A location because of the energy rating.)

However, I cannot tell if you even value a house and the comfort that comes with it. The most important parameter is actually missing from both options, namely the size of the lot.

And then there is the gut feeling, which should also have a say in the decision.

Living is more than just “use.”

And somewhere I read a bit of unease.
How does it come that you are so afraid of not saving enough, to provide several times for life and old age?
You know yourself that everything is already very well provided for – why doubt, not recognize the value, and get into the spiral of not allowing yourself anything from your savings? ETFs are a means to an end, not the purpose of life.

By the way, I recommend risk insurance to secure the partner.

Here, too, you hit the nail on the head again. I can provide some more context here. The saving actually does not come from a feeling of fear but the desire to have as much flexibility and freedom as possible. It has given me a lot mentally at work to know that I have money in the background in case I want to reduce my hours or even quit the job to do something less “lucrative.” Then there is the thought that I still have the dream to maybe reduce significantly or retire in my mid-50s or 60s and sail around the world (I am a sailor, but currently fortunately don’t own a boat... and am more than happy with that). At least I don’t want to completely block this dream. The more I invest, the bigger the financial cushion and the higher the probability to live that dream at some point. By the way, this all sounds very decadent but I come from normal circumstances and my sailing trip would not be a “luxury yacht around the world” but of course such a project still costs a lot.

One has to say that I still have very young children at 40 and I can realistically say that before 60 it probably won’t happen anyway. And then one could rethink what to do with the property when the children move out. We can well imagine selling the house then. Phew sorry it’s getting more detailed and personal :D

By the way, I would have no qualms about investing the majority of my equity. The house is then part of the equity (yes, even a house can be sold again) and you pay significantly less interest to the bank because the money is "really gone." Otherwise, I am quite positively surprised by the prices of the houses. In the introduction, I expected floor values in the range of 1000€+; with that, even for smaller 400sqm plots, you pay half the price for the land, and the house for 200k€-400k€ is about half the value of a new build. For 600k€, even in our rural area, there are only houses that need to be almost completely renovated, and we are far from a big city.

Phew sorry it’s getting more detailed and personal :D

Thank you for your honest words.

Yes, we are buying because it is a matter close to our hearts and we have both always wanted to have a house.

I could read that from the lines.

So the more I invest, the bigger the financial cushion becomes and the higher the probability of being able to live this dream someday. By the way, this all sounds very decadent.

Having a dream is not decadence. And if you want to make yourself financially independent, that is not decadent either.
One problem I see is that you only think about later and not about today. Because the financial provision for later is already there. It does not need to be created again. Everything that is saved now and later adds on top of an already existing base.
And a house, even if you live in it yourself, is also an investment – namely when you sell it. And what you possibly put into it can be classified similarly to rent.
In this respect, you can also use more equity – it is not lost, but ensures a lower repayment.

but the desire to have as much flexibility and freedom as possible.

But you are not mentally there. I only read “money” and “saving.” This is not uncommon in a financing topic, but it really stands out while reading.

You are in the “for-later spiral,” and that’s not healthy. I would split that healthily.

For example, a post for “improvements and projects” is missing, which should be considered when you now have a house + garden.

That’s true. However, one pays for much from the salary anyway. And you have also estimated the additional costs very high. There are options for a flower bed, a pergola, and maybe the savings rate still allows for a small boat that brings the dream a little closer.

On the other hand, I then think, but we can’t spend 3800-4000 for a loan? “Who does that?”

The one who can afford it :)
Do you have an ID from a listing about what it’s about? (No link please, those are forbidden here)

Hi Pablo,
wow – thanks for the super detailed description, it reads really well thought out!
My impression: you are financially very solid, have good incomes, reserves, and think long-term. With the budget of 600–800k, you are operating within a realistic range, especially if you are willing to make compromises on location or size.
Regarding the question of A-location vs. B-location: I would always consider what makes you happier in everyday life. If you say that location is extremely important to you and you see yourselves there long-term, there is a lot in favor of the A-location – especially because of value retention. On the other hand, the B-location can noticeably give you more breathing room in the budget, which provides flexibility (e.g., special repayments or less pressure when changing jobs).
On the topic of loan vs. portfolio: both have their pros and cons. Keeping ETFs means flexibility and the chance of appreciation, at the same time higher interest rates "bite." Using more equity provides more peace of mind because the installment becomes smaller. In the end, this is also a matter of your personality – do you prefer security or the leverage effect with investments?
Personally, I would probably not go all the way to the absolute limit (880k), but settle somewhere between 650k and 750k. Then you have your dream house without it taking away your entire financial freedom.
Looking forward to hearing how the others see it – and which house you finally settle on!
Best regards
Timber

What would you do? Go smaller and use little equity? Buy the dream property and sacrifice more equity? Or better not afford it

What we do: prioritize quality of life, not money. Equity use? Coordinate with the interest conditions. If interest rates are below your own return forecast - use less equity and let it "work." Don’t get greedy in the process. Found the dream property? Go for it. "Better not afford it" is a question of attitude. My standpoint: better risk an expensive mistake and take the path than make no mistake and realize at the end of life that you have experienced nothing.

(...) "Better not perform" is a question of attitude. My position: I’d rather risk an expensive mistake and take the path than make no mistake and realize at the end of life that I have experienced nothing.

However, this is more for the top 5%. For everyone else, such a "risking an expensive mistake" thing can end in private bankruptcy, divorce, total downfall, etc.

Because objectively, with an income of 10,000 scoundrels net per month, nothing is at stake even with option B. Up to a 4,000 EUR installment, the financing is considered fundamentally solid, according to the 40% rule... you can tell yourself that to feel a bit like John Wayne... but de facto even option B is a reasonable decision for that income, no risk at all.