Build a house or buy one - financing possible?

Hello everyone,

My wife (23) and I (26) have been considering buying or building a house together with our 2-month-old child for some time. We currently live in Switzerland because I am Swiss and work in Zurich and have a 4.5-room rental apartment here for which we pay a total of 2200 Euros monthly. I earn approximately 4600 Euros (as a minimum - depends on working hours) per month and my wife currently earns nothing. However, she could work again since the daycares in Germany are affordable if we lived in Germany. In that case, she expects a salary of 1000 EUR per month. Now to our plan: House in Germany, near the border (BW), with Swiss salary but the advantage of lower living costs in Germany. Family planning includes 2-3 children, so accordingly a house with 4 bedrooms. Plan A: Buy a finished house for about 500,000 Euro (without realtor commission) Plan B: Have a prefabricated house (ELK or similar) built for about 290,000 EUR turnkey with foundation slab (without basement). Additionally, there would be incidental building costs (40,000 EUR) and land costs (80,000 EUR). A buffer is included - in short, we would also estimate a total of 500,000 EUR for the construction. Equity is about 40,000 Euro, of which we would like to contribute 20,000. With 20,000 Eur, the loan term is 28 years with a monthly rate of 2000 Eur --> calculated online, bank appointment still pending. The questions:

[*]Which plan makes more sense in our situation? What are, especially cost-wise, the disadvantages of building a house? [*]Is Plan B realistic? What unforeseeable costs could still arise? [*]Is the financing generally realistic? Otherwise, we have no other debts. [*]What else should be considered as a Swiss person working in CH but living in D?

There are quite a few questions... I hope you can shed some light on this for us. Thank you very much and best regards.

When living at the border, there are so-called cross-border commuter regulations. We once went through this for France. And there was a radius that had to be observed. There are some help centers that provide advice because of this. As far as I know, you pay the withholding tax in Switzerland and then the solidarity surcharge and income tax in Germany. Also health insurance, etc.

You urgently need to discuss this with your tax advisor and the tax offices (D and CH) beforehand, otherwise it could end in a crash.

I earn the equivalent of around 4600 euros (as a minimum - depends on the working hours) per month

4600€ gross or net? Are Swiss taxes etc. already deducted here?

If that is your gross salary without any deductions, it might be a bit tight to finance 500k, especially with the risk of the exchange rate...

Even if it is 4600 net, that is not really generous in Switzerland. I have a few relatives in Switzerland (Zürich, Rapperswil, and Winterthur), and when they tell me the rental prices, it makes me feel sick. My salary wouldn’t be enough to rent a 70 sqm apartment :)

But as already said, for such a cross-border project, you have to inform yourself almost twice as much as a pure local. Exchange rate risk is of course on top of that.... :)

Even if it is 4600 net, that is not really generous in Switzerland.

If it is his German net salary, then he can live well with it here! Financing the 500k would then theoretically be possible.
If it is his Swiss net salary, then it will be significantly tighter (we then think about 3400-3500€), and if it is his Swiss gross salary, it will be even tighter!

How the banks handle the exchange rate risk in financing I have no idea... maybe take out the financing in francs?...

Hello everyone,

First of all, thank you for the numerous responses!

The salary is the net salary (with all deductions except for tax - which is not directly deducted from the salary in Switzerland) that I receive from my Swiss employer in CHF, converted into euros. Of course, the whole thing would be financed in francs, precisely to exclude the exchange rate risk.

@Shism: See above: Probably then my Swiss net salary. We assume that instead of putting the 2200 EUR monthly into the rental apartment, we will use it to repay the loan.