Building a house sensible / financing?

Hello everyone,

my future wife and I are currently considering maybe building or buying a house. Unfortunately, the "used" houses here in the area are somehow relatively expensive or in very bad condition, so we would probably prefer to build ourselves. However, we are not really one hundred percent sure if everything would work out the way we imagine.

We had a consultation with a Scanhaus Marlow representative (are there actually reports about this here? Unfortunately, I haven’t found anything through the search or do you advise against it and is there something better in this class???)... the consultant was very nice and answered all our questions (that we have so far), he basically calculated more than necessary on his invoice. So generously budgeted.

We would like to purchase a plot of land of about 500 sqm, price around 40,000 - 50,000. On it should be a house without much fuss of about 110 sqm.

So we would manage with a loan of around 190,000 to 200,000 €.

There is equity of about 25,000 €, furthermore a savings plan with a term of 25 years, which means in 18 years I will get a guaranteed amount of 58,000 €.

As collateral, I also have a company pension plan, a life insurance, and a disability insurance.

My income is around 1,600 € net, of which I currently pay about 550 € rent and "living costs" of about 200 € per month.

My wife currently receives "only" about 800 € parental allowance but wants to work again in 6 months. Job is already in sight. Then it will be correspondingly a bit more but due to our little one it will initially only be a part-time job.

(Possibly in the future there will be additional income from a side job (small business) consulting activity of around 350 € per month... we leave this out for now, since it is unfortunately not regular yet)

What could we afford? Could we afford something?

Thank you all!

What is the house supposed to cost? What is not included in the price? What have you calculated for additional costs? In which region? More children planned? How much does kindergarten cost where you are? How much are you currently saving per month?

Ok, let's calculate the whole thing. You have a total of €2400 available. How much after parental leave – because only then would you probably even get a loan? You can safely ignore the child benefit, because in the future it will only be a fraction of what you need for your child. What are these mysterious €200 "living costs"? How much do you (not just you) need per month to live – for insurance, car, groceries, hygiene products, daycare, leisure, phone/internet, [GEZ], expenses for the savings plan, etc...? How old are you? I think your equity is acceptable in relation to your monthly income, but you can’t make big leaps with it; you can safely keep it as an emergency reserve.

Your first bottleneck is the house price for a new build. Calculate it yourself: land price €40-50k + incidental costs €35-40k. That leaves a total of €110-120k for the house. Even with "only" 110 m2, that won’t be enough. And I haven’t even mentioned any outdoor facilities, parking spaces, let alone carport or garage. That won’t work.

So let’s calculate it for an existing property. If you borrow €200,000 and, for simplicity, assume an annuity of 5% (3% interest + 2% repayment, so that you are finished before retirement – I’m assuming you are still quite young), then you come to a monthly burden of €833. Additional costs will be higher than in the apartment, and you also have to build up reserves. You optimistically have about €1000 left to live on. And that has to cover EVERYTHING. Especially with a child, I consider that unrealistic or far too tight to be seen as a healthy financing.

In summary, I consider a new build in your situation unfeasible and also a house purchase in that price range not promising. Whether there is something cheaper in good quality in your region and whether you should even dare to buy a house right now, you have to decide for yourselves. At least I would wait a little longer until the financial situation perhaps relaxes a bit. Maybe you have already thought about a condominium; maybe that would be an alternative for you. Otherwise, I can fully agree with the questions from DNL for now.

The bank will only consider the 1600 euro income, the parental allowance [Elterngeld] is only temporary, after that everything is open, i.e. the wife's income will not be taken into account.
If this 1600 euros comes from a permanent employment relationship that has existed for several years, which is the absolute basic requirement for a loan, then you have 1600 euros for 3 people. I think you don't need to calculate further to see that this won't work.
If the wife gets a permanent job after parental leave, you can start a loan request about 2 years after the probation period ends. Before that, it doesn't make sense. Unless, of course, the husband's income unexpectedly doubles. Then the wife's income should be pretty much irrelevant.