Building for 5 people... can I really afford it?

Hello forum members,

since there are quite a few posts here, of course I don’t want to stand at the back and would also like to direct my question to you:

My wife (37) and I (29) got married in 2012. She brought 3 children (three boys; 4, 6, 9 years old) from her first marriage into our marriage. Now we want to move from our previous 112 sqm house to a bigger one and build a property that at least provides each child with their own bedroom. Here are the key data:

My income, civil servant, net:
3000
+ approx. 550 child benefit
+ approx. 700 maintenance payments from the ex-husband for the children
+ approx. 700 wife’s income (with the option to increase to 1000)

= approx. 4950-5000 euros per month.

However, the child benefit and maintenance payments are limited in time and are paid at most until about the 18th birthday. The maintenance payment can stop at any time...which is why it makes little sense to include all this in a 30-year financing.

We are getting an undeveloped building plot (near the revision shaft for water and the main power line; since the garden belongs to my parents; proximity to the house is immediate) from my parents. There are no acquisition costs for this (only a felt 8 million for applications, etc.; unbelievable what you read here...).

Our current house will bring us about 50,000 euros after the sale (we believe it can be sold without problems) (running loan with 120,000 euros remaining debt > prepayment penalty?) and serves as a small equity capital.

The rest of the cash of approx. 10,000 - 15,000 euros we want to keep as a reserve, since heating oil and the family van will soon, but certainly, be due...it can only be a matter of weeks now.

My monthly expenses are usual for a family of this size. Apart from my leasing rate for my car - 270.00 euros - everything is in the lower normal range.

Now to my question:

Can I build sensibly* with this constellation at all / will I get a loan of about 250,000 euros?

*sensibly to me means a house with 4 bedrooms and a hobby room for me. I don’t really need extras on a large scale. From everything you read here, however, even two-tone pebbles for the garage driveway and the doorbell sign in blue instead of white cost a lot extra.

The problem with the story is that in my circle of friends and acquaintances, a mega new development area adjoins our current house, I have always been told that you get almost nothing good for under 350,000 euros, which made me suspicious because the people must all earn massively and can build half palaces.

Does anyone, beyond my first question, have experience building a prefab house that is suitable for five people, is within the price range, and is satisfied with it?

Tips, suggestions, advice, constructive criticism – everything is allowed and thanks in advance for your help!

Leon

Fixed costs all in all about 1200 euros monthly (of course + food, fuel, clothing, etc.). But it can vary. The rate of our current residential building with 860 euros is already deducted from the mentioned amount.

Hello Leon,

.... enlarge and build a property that at least provides a separate bedroom for each child.

That means you need about 140 - 150 sqm of pure living space.

since the garden of my parents; proximity to the house is immediate) is provided to us by my parents.

That's nice for you, but it does not necessarily mean that so-called hinterland development will be automatically approved. First of all, go to the building authority and clarify on site whether your parents' garden is designated for development.

Can I even sensibly* build with this constellation or get a loan of about 250,000 euros?

Whether this is feasible, you should clarify with an independent financing broker you trust.

What funds you will need – assuming you are really allowed to build in your parents' garden – will be about EUR 220/230 thousand for the house on a slab foundation alone. In addition, typical construction incidental costs of around EUR 35-40 thousand will apply.

and a hobby room for me.

You can gain this room with a prefabricated garage 3 x 9; costs including sectional door approximately EUR 12 thousand.

... that you get almost nothing good under 350,000 euros, which in turn made me suspicious

House estimated: EUR 230 thousand
Prefabricated garage: EUR 12 thousand
Incidental costs: EUR 40 thousand (40, as you have more meters for public connections)
Painting/flooring: EUR 10 thousand
Outdoor facilities: EUR 10 thousand
Reserve extras: EUR 10 thousand

total EUR 312 thousand

Has anyone beyond my first question built a prefabricated house,

You probably don't want to afford a prefabricated house in the classic sense and from a reputable provider; better look right away at the solid house providers.

Best regards

Hey construction expert, thank you very much for your assessment and the prompt response!

Why won’t it work out with a prefabricated house? Aren’t they especially attractive because they don’t cost as much as solidly built houses?

Regards,

Leon

Hello Leon,
with the income and the security as a civil servant, you can choose the bank that should provide the financing. You will probably even be asked if you want a little more loan.
The question you should ask yourselves, however, is the question of the loan term and thus the repayment. With the income, for example, one part of the loan could be fixed for 10 years, which is also completely repaid after 10 years. Another part can be fixed for 20/25 years (with the possibility of special repayments). This way you have the security that after 10 years the risk of losing the child benefit = 0, because you would only have to continue paying the second loan.
Have a financing advisor calculate a few models for you.

Just for comparison, we earn a little less per month (for 2 adults + 3 small children, but no costs for our cars since they are company vehicles) and thus get a loan of EUR 325,000 without problems (loans are repaid before retirement = 20 - 25 years term).
More tips gladly via PM.
Best regards
Nordanney

Hello Leon,

Why is building a prefabricated house not working out? Aren't they attractive precisely because they don't cost as much as solidly built houses?

It's actually the other way around!

Prefabricated houses are subject to a different manufacturing process than solidly built single-family houses. Production of the prefab house only begins once the permit without conditions has been issued. If you decide on a reputable provider, there is also a waiting period of up to a year; their order books are well filled, and their market share is only about 11-12%, measured against the total construction volume in Germany. As far as the interior finishing is concerned, it takes just as long or as short – depending on the observer’s point of view – as with a conventionally built single-family house; about 3-4 months, depending on the size of the property. The only thing that really goes "quickly" is the actual erection of the shell.

A conventional builder starts the earthworks immediately after submitting the permit without conditions as well. The "pure" time saving amounts to at most 3 weeks, if at all. Of course, delays can also occur with a solidly built house if your chosen provider’s order situation is very good.

The price advantage of a conventionally built single-family house over a prefab house is also explained by the different production processes; a prefab house – especially one of the high-quality ones on the market – "cannot" be cheaper. Another "disadvantage," if you want to call it that, lies in their evaluation from a bank’s perspective. Your banker will be able to give you good information on this.

Kind regards