Buying a house: realistic or are we overextending ourselves?

Good morning,

my wife and I have been looking for a house for 1 1/2 years now and had a look at a nice property today. However, as is often the case, it is actually above the budget limit we set ourselves. At the start of our search, we already consulted a [URL_INTERNA=https://www.hausbau-forum.de/threads/dr-klein-erfahrungen-bei-vermittlung-kredit-von-bank-genehmigt.29957/

Dr. Klein[/URL_INTERNA], but before or alongside that, I would also like to hear the opinions of people who do not earn their money from this and possibly have experience to draw on.

General information about you:


[*]My wife & I are 36 years old
[*]1 child since Dec. 2024
[LIST]
[*]No further children planned


[*]I am an engineer in the automotive industry
[*]My wife is a social pedagogue assistant with little professional experience, as a career changer.
[*]I work full-time, my wife is on parental leave.
[*]My wife will become unemployed during parental leave as the fixed-term contract will of course not be extended. However, she can start working there again at any time (verbal statement).


[*]We generally assume that she will find a job quickly in the daycare/kindergarten sector.

Income and asset situation:

[*
Currently 4600 net with me (tax class 3) + 1000€ parental allowance
[*]255€ child benefit
[*]How much equity do you have?
[LIST]
[*]I have about 150,000€ in daily allowance/bank
[LIST]
[*]+ 7,000€ in stocks, actually set up as a savings plan some time ago for retirement
[*]+ 30,000€ in a Riester pension contract (--> conversion to Wohnriester?)


[*]My wife has about 15k€ in the daily allowance

[*

How much equity do you want to put into the house project?


[*]That's the exciting question. I'm considering dissolving my Riester to go into the house purchase with about 160,000€ equity.

Housing costs:

[*
Warm rent 770€ for 85m2
[*]Electricity 50€
[*]Internet, streaming, mobile, public broadcasting fee approx. 75€


Mobility costs:


[*]Car 1 (maintenance, insurance, tax, fuel):
[LIST]
[*]approx. 260€


[*]Car 2 (maintenance, insurance, tax, fuel):


[*]approx. 140€

Insurance costs:

[*
Liability insurance (including pets)
[LIST]
[*]6€


[*]Pension insurance (including Riester, Rürup, etc...)


[*]Riester 162€ (will be reduced to 130€ by child supplement)


[*]Disability insurance


[*]65€

Living expenses:

[*
I would estimate groceries at about 250-300€.
[*]Restaurant costs
[LIST]
[*]Max 1x per month


[*]Daycare/school fees (and meal money)


[*]Will be an issue in the future, somewhat dependent on the district, so currently really hard to estimate and needs to be researched again


[*]IGM contribution


[*]41€

Savings contributions:

[*
Vacation
[LIST]
[*]Once a year, certainly between 2000-3000€


[*]Retirement provision


[*]In addition to the Riester contract, currently 400€ monthly savings rate in ETFs

Other expenses:

[*
No loans running, no further expenses


Income and expense totals:


[*]Total income
[LIST]
[*]4600 + 1000€


[*]Total expenses


[*]Fixed monthly expenses approx. 1600€

General information about the property:

[*
How large is the plot?
[LIST]
[*]653m2


[*]What is the standard land value?


[*]300m2 --> approx. 200,000€


[*]New build, old building (year built), house type?


[*]Low-energy house (prefabricated house) from Haake Haus
[*]Timber frame construction with gable roof, detached house built in 2002


[*]Garages?


[*]1 carport


[*]How big is the house? (living area / usable area)


[*]131m2 living area


[*]

Construction or purchase costs:

[*
Acquisition incidental costs (notary, court, property transfer tax, broker)
[LIST]
[*]33,600€


[*]Construction or purchase costs (incl. architect, structural engineer)
[*]Renovation and/or refurbishment costs


[*]A new gas boiler is needed, otherwise nothing currently known


[*]Total costs


[*]480 + 33 --> 513,600€

Other costs:

[*
Kitchen costs
[LIST]
[*]Can be taken over

Cost summary:

[*
Total costs
[LIST]
[*]513,600€


[*]Deductible equity


[*]160,000€


[*]Financing amount


[*]353,600€

We have a bit of a fear that we are overextending ourselves. The house is currently listed for the above-mentioned 480,000€, we had planned a maximum rate of 1400€ so that we can still live well. Since we currently live relatively cheaply renting, "everything" feels too much.

If I do the math myself with the usual calculators, I definitely don't get a viable result, the rate would be around 1600, probably rather 1700€. Am I being too conservative to see this as a problem?

Do you consider this realistic in the current market situation due to interest rates? Are we too cautious here? I currently calculate with myself as the sole earner, with the described 4600€ net. Our son is now 4 months old; my wife planned to go back to work when he is 1 1/2 - 2 years old. So we would have about 1.5 years to bridge. Of course, if that happens exactly. If she works full-time again, her salary would theoretically be enough to cover the loan amount and incidental costs, then my full salary would be available for living and saving.

Furthermore, I am still unsure whether I should convert my Riester contract. However, the value of the contract is well below the guaranteed amount, which definitely made me think. The performance has been abysmal in recent years. Therefore, I am considering converting it and thus increasing my equity somewhat.

Do you see the targeted amount or the theoretical purchase as critical? Have I overlooked anything? I am open to thoughts, questions, experiences, etc.

The house is currently listed for the above-stated €480,000, we had once planned with a maximum installment of €1,400 so that we can still live well.

That fits well. I would have roughly guessed the financing amount with a €1,400 installment. That is about 1.5% repayment. You can agree on a repayment switch in case your wife can bring in decent money again when she starts working properly.

Am I too conservative if I see a problem there?

Sort of. Not willing enough to take a moderate risk in life for a great goal. Always remember that the installment includes a "cold rent" of about €900 and an asset formation of €500. And that it is possible that inflation increases your salary (salary increases), but the installment remains the same. Etc. €1,400 installment is 30% of your income, wife’s income on top. That is actually really healthy. With the framework data, any bank will finance you without batting an eye. P.S. Child benefit is, by the way, a perfectly normal income component. You are also budgeting for expenses for the child, so do not omit the income.

Do you see the targeted amount or the theoretical purchase as critical? Have I overlooked something?

No. If you absolutely want an installment of €1,700 or more (due to increased but not necessarily required repayment), that would also be okay, but I would think twice about whether that really has to be. In case a second child is brought by the stork or for whatever reason your wife can/wants to no longer work. But it will still work without major losses in quality of life.

I would estimate groceries at about €250-300.

Tip: keep a household book. When I read your estimate, I would guess you have not been shopping for a long time or are constantly dining at your in-laws. €300 for 3 people is a little over €3 per day per person. That will really be tight.

nordanney mostly said yes. The most important thing was the cost of groceries. I would rather calculate with €500 as a median for 3 people.

One more point comes to mind: your €4.6k net is probably tax class 3 and the parental allowance is subject to the progression clause. Without knowing your individual tax details, I would currently budget €100-150/month for the tax repayment in the household calculation. That will of course change immediately when the wife is no longer receiving parental allowance.

A Riester contract that is below the guaranteed amount, I would immediately deactivate. This is actually only possible if no savings were made in a Bausparvertrag. Therefore, I would not use any Wohnriester. The interest rate will be above 3.5% and thus you have a little over 1% repayment. It can be done.

A small warning about the Riester contract: If it is converted into Wohnriester, you will have to deal with the Wohnförderkonto when using it. Normally, I would clearly advise against it; in this case, it could of course reduce the financing amount and monthly payment. (Please google Wohnförderkonto - if I try to explain it, I just sound crazy.) Otherwise, it sounds tight at first, but overall quite manageable? Especially after one or two years (during which, for example, the vacation might be canceled and retirement provision, keyword Riester, could be reduced), it should ease up - salary increases, possibly the wife returning to work?

That fits well. I would have also roughly guessed a repayment rate of €1,400 on the financing amount. That would be about 1.5% repayment. You can agree on a repayment change in case your wife can bring in good money again when she starts working properly again.

hm I think I was a bit too imprecise there. With the €480,000 and the equity of €160,000 I don’t get to €1,400, but that would be the amount we would like to aim for. We would probably only achieve that with an extremely short term with the corresponding interest rate risk after 10 years. What I wanted to say with that sentence: I would try to negotiate so that I get to a rate of €1,400, ideally as a full repayment loan.

Tip: Keep a household budget book. When I read the estimate, I would guess that you haven’t gone shopping in a long time or that you constantly eat at your in-laws’. €300 for 3 people is a little over €3 per day per person. That’s really tight.

That’s a good point. The €250-300 were only my expenses for shopping. Of course, my wife also shops, so €400-500 are more realistic. I will review the last few months again and calculate an average from both accounts!

One more point comes to mind: Your €4,600 net is probably tax class 3, and parental allowance falls under the progression clause. Without knowing your individual tax characteristics, I would currently plan €100-150/month for tax repayment in the household calculation. That of course changes immediately when your wife is no longer receiving parental allowance.

Exactly, I am in tax class 3. Parental allowance lasts until December 25, so the next tax assessment will be rather suboptimal for us.

It should also be said that I will get a salary adjustment in September, then I will be at about €7,000 gross instead of €6,600~. All in all, after sleeping on it overnight, I have a somewhat better feeling now.

A small warning about the Riester contract: If it is converted to Wohnriester, you get involved with the residential promotion account when using it. Normally I would clearly advise against this; in this case it could of course reduce the financing amount and monthly rate. (Please google residential promotion account - if I try to explain it, I just sound crazy.)

Thanks, I’ll inform myself about that.

I will make an appointment with Interhyp next week and contact the local savings bank for a comparison on conditions and report the result or interim status here again.

Thanks for your questions / suggestions & thoughts!