Build a house? Financial advisor says the land and financing are okay

Nowadays, one has to expect that the parents' house and property will finance their retirement. This eventually means selling the property and monthly costs for rent and care, which will be paid from this sale. The same will happen with "our" houses.

Of course, it does not always have to be that way. My wish is to eventually be able to pass the house on to our children, if they want it. But regarding what should come out of your answer, I absolutely agree with you: One should never count on an inheritance. It is always a "nice-to-have," but it should never be the basis or part of a calculation.

Otherwise, I agree with my predecessors. Question whether this price is actually realistic or how many costs will actually be added, keep a household budget, and try not to sugarcoat anything. Also question why there is no equity or whether you can and want to permanently bear the higher costs that come with building a house. In summary, I join nordanney: The necessary loan amount (if it would actually be enough) is quite a chunk at that income without equity that you want to take on.

We recently bought turnkey. Nevertheless, there were numerous special requests, furniture, different garden design, etc.

Surely you will be offered financing including incidental costs. But at what price?

10 years fixed and then?

Why was no equity saved? Do you dare to take on such a high burden without previous equity?

37/32, both employed and without equity, that would make me think...

We (both in our mid-twenties) are currently building and hadn’t saved any equity either. But due to the low interest rates, we thought, "Let's see if the banks go along with it." Our realtor recommended an independent financial advisor, who immediately said it would be difficult without equity. However, my house bank (Sparkasse) agreed and even financed the additional purchase costs (which is a must without equity, and according to the recommended advisor, most banks would have dropped out at that point at the latest). The important thing is that the house is in a good location. Then you might be able to sell it off more easily in the short term if unemployment actually occurs or something similar. Even then, you will certainly make a loss, but you don’t necessarily have to end up with Peter Zwegat right away.

One should be aware that building a house is always a risk. However, here (the Stuttgart metropolitan area), existing properties also go for a fortune. Therefore, in our price range, it doesn't really make much difference whether you build something mediocre or buy a reasonably well-maintained existing house. Cheap here only means garden plots, houses without public transport connections, or renovation cases.

A household budget book is – as already said here – the be-all and end-all to get an overview of expenses at all – you always forget something when calculating quickly. For example, our washing machine broke two weeks ago and needed replacement, which also had to move into the house – so something better, and high three-digit sums just disappeared "just like that." Such things should ideally also be recorded in the household budget book so you know whether you can still afford the installments. We have had a household budget book for over a year now, and slowly I can reasonably estimate what we need each month for the different areas.

Even if no equity is available, one should be able to save some. My predecessor also seems to doubt this with the statement "37/32, both employed and without equity, that would make me think..." He is right in that you should always have some reserves. Whether you throw them into the house or not is, in my opinion, not so decisive. On the contrary, if you use them as equity for financing, the money is gone initially, and you can’t make emergency purchases with it. We have made it a goal to save a lot and now already have equity – but we do not use it for the house, rather as a reserve for things like washing machine, car (the house is a bit outside, and then it becomes at least necessary to get a car for convenience reasons), or occasionally a vacation. Here, too, the household budget book really helped us. After the rather pessimistic initial estimates, we were even able to increase the savings rate in recent months. The money is parked in a free daily allowance account of a German bank. That way, it is reasonably safe, and you don’t constantly see the sum on your current account (which could perhaps tempt you to just spend the money). And as long as negative interest is not yet charged on deposits, it is still somewhat worthwhile. Finanztest often publishes reports on current reputable daily allowance offers with (comparatively!) high interest rates.

One should be able to save some equity even if none is available at the moment.

I believe that this is one of the key points. Anyone wanting to buy or build should consider why this is the case and whether they can realistically save more. For example, if I go on vacation 3 times a year and can, in good conscience, skip one trip without missing out on anything, then it can work. But if at the end of every year I break even because something else always came up, it will be difficult or impossible to suddenly start saving. Because there will always be something that costs money.

Usually, the costs for the loan installment + additional costs + necessary insurances + reserves for the house are significantly higher than the current cold rent + additional costs. Accordingly, one should realistically check whether this extra burden is truly manageable.

Just for comparison
My wife and I are in almost the same situation – similar income, similar age (36/31), one child.
The first 7 years of my professional life, by today's standards, I earned below the poverty line. Financing further education meant that by the end of the year, not much was left.
7 years ago, my wife finished her studies, I changed employers, and we moved in together.
Since then, we have saved about 90K€ together. Despite parental leave, despite our wedding, despite BAföG repayment, despite two vacations per year, despite two cars, etc.
In your place, I would also wonder why there is no equity. Was the rent that high before?