Building a house, future plans - use building savings or interest now?

Hello everyone,

hello first of all to all.
Since I want to do something for the future of house building soon, I have a few questions and hope you can help me with them.
Unfortunately, I get very different opinions from family and acquaintances and am therefore very confused.

We have been renting a 110 sqm apartment for almost 4 years and pay 630€ cold rent for it (very cheap east of Munich).
I have been working as an engineer for 4 years and have a permanent contract (2700€ net).
My soon-to-be wife is currently finishing her training to become a Dr. in Biology and will then probably earn between 2400-3000€ net. Right now she has 1600 net.

We are already saving very diligently and together put aside about 1500-2000€ every month.
And we already have almost 70,000€.

We have been looking for a building plot for 2 years, but have not found anything suitable so far, since most plots cost 300-400€ per sqm.
The solution will probably be to move a bit further out to the countryside, where you currently pay about 120-150€ per sqm.
Since I want to build a single-family house, I think it should be at least 500-600 sqm or more.
I want to spend about 120,000€ on the plot. For a single-family house I reckon about 300,000€ (???).

So all in all I expect costs between 400,000 and 450,000€. I hope that is realistic?

Now the question remains how we should proceed?

So first keep saving until we find something, since in my opinion our rent is really low.
But it may also take 2-3 years before we find something.
Or should we rather buy a condominium for 150,000-200,000 as a transition?

Should we both now conclude building savings contracts with Wohnriester? All my buddies are doing that and are all convinced by the LBS building savings contract (LBS T8-R), which can then partially repay the loan in 10 years with good interest.

Does that mean I top up my building savings for 10 years and if I want to build next year I still have to repay a loan of maybe 320,000€ on the side? That would be a double burden for the first 10 years.

Later I do not want to finance more than 1400-1600€ [per month], since we also expect to have only one earner for a few years (children). And before I take a big risk, I prefer to lower my expectations (semi-detached house).

So what would you advise us to do as the next step?
Interest rates are currently very low. Can we take advantage of that?

Hello Hans1986,

as a banker, I would like to give you just the following to consider regarding Wohnriester:

Today no one knows how the Riester schemes will be taxed in the future - therefore, I did not want to have such an uncertainty factor in my construction financing.

A plot size of 500 - 600 sqm is nice, however, a single-family house can also fit on smaller plots. Our house, currently under construction (see Avatar), is on a 369 sqm plot but also offers 190 sqm of living space + usable space and 2 garages.

There is not much leftover land, though, but land prices here range between EUR 450 and 600 per sqm.

You can roughly calculate the house price at EUR 1,500.00 to EUR 2,000.00 per sqm of living space - however, this does not include incidental building costs - you should also budget EUR 30,000.00 to EUR 45,000.00 for that.

If you really want a single-family house, I wouldn’t bind yourself to a condominium anymore for 2 - 3 years. Better to keep saving diligently and expand the search radius for possible building plots.

Many municipalities also have waiting lists if new building areas are already planned but not yet for sale - asking and getting registered without obligation doesn’t hurt.

Regards,

Dirk

Hello,

My soon-to-be wife is currently finishing her training to become Dr. Biology and will then presumably earn between 2400-3000€ net. Right now she has 1600 net.

Is that an assumption or a firm commitment? PhD student at the university? I ask because our son also studied biology and - since there are hardly any jobs offered for biologists outside the university - he is now working in a completely different field.

Rhenish greetings

I would first wait to see what the future brings. Only if your wife has a secure job and you are also sure that you want to stay there would I buy a plot of land. But starting to look now and getting a feel for it is certainly not wrong. In your place, I would stay in the apartment as long as possible and continue to save. You probably can't live cheaper in Munich.

How far east of Munich do you live, or plan to build, that the price per square meter is so low. In the west we have reached 1000 euros, undeveloped of course.

Or would you rather buy a condominium as a transition for 150,000-200,000?

Personally, I wouldn't do that.

Stay in the current apartment as long as possible with the rent and save diligently.

Just because interest rates are so low doesn't mean you have to get crazy and "compulsively" build.

I find Wohnriester/building savings plans somehow unwise at the moment.