Buy a second property - on existing mortgage

Hello there
Now I have a question again: we are considering buying a small apartment for my mother. The purchase price would be about 40,000 euros for 65 sqm in HB (newly renovated and well maintained). That is such a ridiculously low purchase price that it almost physically hurts not to go for it. Rents and purchase prices are still very low there, even though the region, or rather the state, has a lot to offer. It’s my old home, so I have been following it and a lot has really happened there.

For that amount, you probably can’t get a normal building loan that easily; apparently, it is too low for every calculator I have tried. Now we have our house with a mortgage of 210,000 and after 7 years there are still 167,000 left. Could I realistically get a payout up to 210,000 now, for example, which would save me from a new mortgage and registration?

The rent would certainly be significantly higher than the credit rate, or in this case, we would just continue paying the previous rate? Unfortunately, we don’t have any equity because every bit of money has gone into the house and special repayments.

Since the approval of the follow-up loan in 2017, our income has increased drastically. Previously 2,600 net family income, now we are at 4,500 net or 4,200 without bonuses, Christmas money and vacation pay. Two people with permanent contracts. For me, it will also increase again next year when I go up to 100%; I currently work 70%. (1,560 net, from 2020 then 2,000 net). No children and the topic is also done for age reasons (I’m 42).

The apartment should be rented to mom, I think for 300 euros. We would pay the incidental purchase costs in cash.

Expense-wise, we now still have our house loan with 168,000, rate 770, repayment 3.25% and a car loan, remaining debt 4,000 euros, fixed rate 240, but I am currently paying 750 euros monthly. The loan will be gone in August.

Is it worth asking the bank or is such an approach without a second mortgage on the new apartment rather unrealistic? Or a second loan, but where can you get that with reasonably good interest rates at that amount?

Mortgaging an existing property should be possible. A second/own loan would have the advantage that you can deduct the interest as a landlord from your taxes. That would definitely be desirable. Just ask brokers or your current bank what can be done. You could also cover the 40,000€ through a quickly fillable [Bausparer]. Or or or.

...Just ask intermediaries or your current bank what can be done there.

Exactly my tip. Use some equity, calculate rent, the risk of rent default is rather low, and off you go. It can surely be solved independently of the existing house.

Saving a bit more equity would certainly be possible, as my entire salary is "left over". Well, I’ll ask the current financing bank. I mean, if necessary, a second loan with mortgage and all would of course work as well. The fees are really limited given the low purchase price.

One question: how good are these loan provider comparisons, since I get results with installment loans for free use with 0.69% interest, e.g. Ofina loan etc. Is something like that reputable? If so, why am I paying 3% for my car loan? That is even cheaper than a mortgage loan, example installment would be around 500 euros over 7 years for 43,000 euros. Apartment paid off in 7 years, sounds almost too good.

Could I realistically get a payout up to 210,000 now, for example, that would save me a new mortgage and the registration?

Only your bank can tell you that. The question will be: What is your house worth and what conditions do you get for a subordinated loan (secured mortgage or rather an unsecured loan?). Creditworthiness is not an issue for you. Otherwise, financing will be difficult, because many banks only start at €50,000 and then (understandably) charge considerable premiums. So first, just

Ask what 40k with a land charge on the house costs and what it costs on the apartment. It may be that the tax office has problems with it.