Building a house without equity

I agree with you that orthography today does not allow any conclusion about an individual's professional situation; here Voki, in my humble opinion, overshot the mark (unfortunately, a "like" cannot be limited). I am also often horrified when I see some styles of writing (regardless of the HBF); on the other hand, I myself consistently write according to the old – learned – spelling, and according to prevailing opinion am therefore not even capable of correct sentence structure and do not comment on it.

Nevertheless, the structure/content of the original post suggests that a rather naive mind is hiding behind the associated nickname and for me – a perhaps overshooting – comment is preferable to silence in the forest.

I too am sometimes horrified when I read certain texts. This one here was rather harmless.

Regardless, I have learned generally not to judge a person by their appearance or similar circumstances. I have seen too many contradictions for that. People who were dressed like the biggest bum on the corner (one was tempted to give him a euro for some food) turned out to be millionaires. Others, who appeared to be pretenders (smart suit, excellent manners and expression), actually didn't have a penny to their name and tried to pass themselves off as some kind of impostor.

Especially in the current situation (house building), I experience it again and again – people are different and should not be judged by appearances (for me that also includes handwriting). My opinion on that.

And now back to the topic.

If I have been misunderstood, I apologize. I do not measure a person's "worth" by status, reputation, or income. Spelling also does not matter here. However, I measure my recognition by the responsibility someone takes for their family and themselves. This is exactly what has happened here through the inquiry. He is informing himself and already senses that it may not be such a good idea to fulfill the dream of homeownership in this way now.

And with that, you have now received my "like."

Now once again to the facts:

280,000 EUR
3.10% interest p.a. / fixed for 30 years
1.00% repayment p.a. / plus accrued interest

monthly installment: EUR 956.67

As mentioned before, the installment amount given by the original poster (OP) cannot be correct if the loan amount, interest rate, and repayment are accurate. That would correspond approximately to about 2.6% p.a. This condition exists—if at all—with a thirty-year fixed interest period only for the very best credit ratings with considerable equity shares and virtually risk-free lending. But I also doubt that a little.

But let’s assume the installment amount were EUR 956.67 and could also be paid for the full thirty years, which I would expressly wish here. The remaining capital after thirty years would still be about EUR 141,600. Let’s just round it down and say: EUR 140,000. The OP would then be around 60 years old and presumably still—hopefully in perfect health—about 5 years working, and so would his wife—who is then still present and fit as well. After 30 years, the interest rate fixation must be renegotiated. Interest rate level? We don’t know, but it is quite likely not to be at the current low interest level.

What happens? The bank certainly does not want to wait another thirty years for repayment but wants to receive the loan repayment during the borrower’s lifetime.

Each percent of repayment or interest initially corresponds to EUR 116.67. Let’s assume—extremely optimistically—that the interest rate would be 5% p.a. The remaining term of the loan should be max. 10 years, which would lead to a repayment rate plus accrued interest of about 7.75%. The monthly installment would be just under EUR 1,500.00. Remarkably, starting from about age 65 and in perfect health, income due to entering retirement will be lower and the installment nearly doubles in fact.

That could be avoided through special repayments. However, I hardly believe that the outstanding repayment amount after thirty years could even remotely be paid off during this time through special repayments.

Normally, it is assumed that the incredibly low interest level is used to increase the repayment. Looking more closely at the statistical data series for mortgage loans, it becomes clear immediately that interest rates can only go up. Therefore, fixing interest rates as long as possible—especially with tight regular liquidity—is particularly important. Here the OP is doing exactly the right thing. 30 years fits.

The financing advice seems to have been made quite amateurishly and I dare to assume that a concrete commitment is also not yet available. This financing would not materialize with less than 3% initial annual repayment. At the mentioned interest rate, the installment would amount to EUR 1,423.33, thus more than slightly exceeding the budget.

All I can say here rationally is: stay away, don’t make yourselves unhappy.

If I look at my calculation now, I realize myself that this would be a harakiri action with a child. The child is more important to us after all, it's about time. What annoys us so much is the current apartment that we dreamed of owning our own house. New condominiums in Berlin start at 300,000 euros, that would not be an alternative. Personally, I can't find any existing properties either.

Here I can only say rationally: stay away, don't make yourselves unhappy.

There is nothing to add and it has already been realized accordingly by the OP. Even if the dream of a house cannot be realized in this case at the moment, this thread is helpful in that the OP will not eventually find himself in front of the shattered pieces of his life.

A small note to We ourselves also completed family planning before we started building the house. Of course, we are aware that kids become more expensive over the years, but now we were at least able to realistically calculate how much we currently have to consider for children.

I agree with that. Our 3 children are there. We know what they cost and how much we currently 1. can still save and 2. pay in rent. Additionally, we have managed the land and almost 1/3 of the construction costs with saved equity or are in the process of doing so. Just because it doesn't fit right now doesn't mean you can't realize your dream in 3 or 5 years. Save up equity, then the whole situation might look very different soon.

Hello and thank you for your honest opinions. I am glad to have visited the forum. We have put the topic of building a house aside. We are first diligently saving equity and will see how things look in a few years. If necessary, I might then buy a house cheaply from those who were in a similar situation and were not on this forum. In the end, we prefer it that way anyway; less stress means more time for the family.

Thank you very much again.