Building a dream house - and is it feasible for us?

Hello everyone,

as a small family, we wish for our own four walls in the form of a single-family house. As is currently being talked about everywhere, interest rates for home financing are very favorable, which is why we are considering building a house. However, until now we have not given any thought or gathered information in this direction, so I would like to get your experience@advice on whether this wish is feasible for us...

We are a family of four (34/33) and two children - 6 and 3 years old. My wife is currently not working, occupied with the household and children. I earn 3.5 thousand euros net monthly. Additionally, there is the child benefit. I could imagine spending 1500 euros monthly (warm -> meaning, repaying 1100-1200 loan and 300-400 as incidental costs).

We have no equity (possibly 10 thousand), but I can do many things myself with the interior finishing (flooring, wallpapering, tiling, etc.) (I have already gained extensive experience with several moves)... -> will this possibly be credited as equity?

I imagine a maximum loan amount of 300 thousand euros, preferably 250 thousand, and want to pay off the house with the land within 30 years. The land costs 100-130 thousand (+20 thousand for the notary and registration in the land register) - 2 plots are available for choice and the house itself is about 130 sqm without a basement.

My questions are - is building a house with a 250 thousand loan and paying it off over 30 years feasible for us? We want to spend no more than 1200-1300 monthly for loan repayment (preferably). Or is it better to wait a few years and then start with equity (I think 30-35 thousand in 3 years would be possible)? We live in the Mainz area and it would be great if the next steps - visiting a bank/savings bank or financial advisor - could be recommended to us with appropriate, important information for borrowers... We would also be happy about positive experiences with construction companies from the Mainz area.

Thanks in advance!

Regards

Above all, think about the house construction costs. If you want to take out a loan of 250-300 TEU (rather 250 TEU), and you already need 120-150 TEU for your plot of land (inc. ancillary costs), then only 100-180 TEU remain for your house including the basement. If you now also consider the additional construction costs, then not much remains for the house including the basement...

But to answer your actual question. You are currently renting, right? How much? What has happened to your equity so far? If you say ad hoc that you can pay about 1200 EUR per month in annuity, what has happened to that money so far? Are there any liabilities (e.g. car)? At the bank, you will need a 100% or larger financing. That will significantly worsen the interest conditions. I would start immediately to put the amounts you intend on a [Tagesgeldkonto] and build up equity. Until you can possibly start building your house, many months or even 1+x years will certainly pass. Then you might already have the money at least for the incidental costs and possibly no longer need a 100+x financing.

@Schubert: without a basement ... I read.

Nevertheless: no equity, 250 thousand loan minus 150 thousand land remain 100000. Subtracting a cautious 30 thousand ancillary building costs, 70 thousand remain for the house. That won't work.

: where do the price indications or house indications "to choose from" come from?

When I enter Mainz + surroundings on Immonet and co, cheaper plots come up.
Also new houses on plots that are in planning... admittedly under 200000, but usually additional costs are added. Nevertheless cheaper in the end, than a plot with 130000 and that won't work.

Hello, I see no room for financing here. With that income and hardly any equity, a bank will not want to go along with 300k with you. The focus was on child-rearing (which is also OK).

thanks for the quick responses.

@Schubert: yes, we rent, 900 per month (warm, ... I am calculating with 1000 after all final bills). So far, saving has been nothing, as we haven’t made any plans until now and before I didn’t earn 3.5 per month (studies, Bafög repayment in one lump sum, children, etc.). So, before there was no real potential to set anything aside.

@Ypg: land prices (130K) come from the city, luckily without any intermediaries etc. Currently there are still 2 plots available that we have looked at and liked. The stated land prices refer to plots that we could buy immediately in the residential area where we live and would also like to continue living (the last ones still for sale). But, as I said, we are very NEW in this area and haven’t looked at any other locations/plots.

@Schubert/Ypg: I’m only concerned about borrowing a realistic amount. And ultimately I want to pay off the loan in 30 years, at 60 I don’t know how fit I’ll be and what income there will still be. Furthermore, I don’t want a very large house, since the kids will eventually leave the house and then we won’t need a big house.

In summary: I have focused on the plot and the 30-year loan repayment (1200 EUR monthly). That’s why I think 300K is my limit. So I am calculating with a 150K house about 130 sqm in size, of course not turnkey, with some work done by ourselves.

Or am I seeing it all wrong? Where can you actually save (everything from one construction company or arrange different companies & craftsmen yourself and do some work yourself)?

P.S.: Regarding offers – a house for 70K, as from some prefab house providers, I actually don’t think much of it. I’m currently looking for some providers in the Mainz area.