Buying a house without equity at a relatively young age

2 cars to get to work? That is speculation for now. The purchase price is not low, which suggests an urban area. Neither my wife nor I drive to work, even though we have a car for private purposes. Even if we did, used small cars are enough for such young people. If it doesn't have to be a leased Mercedes right away, it is not necessarily a huge cost item.

The renovation does not have to be carried out immediately, but can at least be done progressively. As a couple, you will hardly need all the rooms in a house. Therefore, liquidity does not have to be fully available today. I would not advise a family to proceed like this, but a young couple does not have to start today with a 30,000 euro built-in kitchen. The same applies to the bathrooms. You can start with the old stuff and replace the first bathroom after a few years, and so on.

Also, 500k loan, why not? Probably results in a monthly rate of 2,500. That leaves 2,500 remaining, which is plenty to live on if you don’t want to immediately exchange student standards for a luxury lifestyle.

Some people here have their dream image of a turnkey city villa, 2 SUVs, and 2 long vacations per year in mind. The daughter is driven to piano lessons, the son to tennis. There is no time left for personal work and compromises in living conditions have long been a thing of the past by the mid-40s.

I can’t quite understand the point of a house at that age. But only at this age can you still make the compromises needed to turn such a house into a gem over the years. Others at that age still live in rundown shared apartments, where the bathrooms are already 50 years old, if not older.

What is clear, however, is that the OP must be aware of the necessary compromises and not expect to move into a renovated mansion in a few months.

I also see the numbers as too naive. I am normally more of a pro type here in the forum, but I also think the renovation costs are set too low here. We don't have much information about the house, but usually it costs more than you think at first glance. As far as I know, you would also have to fulfill the renovation obligation, so presumably at least insulate the roof, or has something already been done there? Three years ago I would have seen it differently, but with the current interest rates and without any equity, it will be difficult.

It has to be. Otherwise, the bank says no (I am the bank). With that risk, you want to get out of the risk. And that only works with at least 2% repayment. 1% in that constellation will lead to rejection by all banks 99.9% of the time.

Most banks will want that, yes. But that doesn’t mean that there isn’t one that, due to the unusually young age, also offers full financing with 1%.

In any case, the problem is not inherently the affordability, which is given. Rather, it is some credit granting guidelines of the banks. At that age, you can also manage your daily life with 500 euros. You just must not, like other career starters, invest your money in short trips to London or Paris. At that age, you can also expect salary increases, which should quickly bring relief.

I don’t understand the meaningfulness of the project, but maybe one shouldn’t always assume their own life situation and then draw conclusions about others. This does not apply to your comment now. A bank must of course finance it; otherwise, the theoretical affordability is of no use.

I also see the numbers as too naive. I’m usually more of a pro type here in the forum, but I also think the renovation costs are set too low here. We don’t have much information about the house, but usually it costs more than you think at first glance. As far as I know, you’d also have to fulfill the renovation obligation, so probably at least insulate the roof, or has something already been done there? Three years ago I would have seen it differently, but with the current interest rates and without any equity, it’s going to be difficult.

The renovation costs are definitely set too low. If the OP intends to move into a finished house, it won’t work out like that. With corresponding personal effort and perseverance, I do see a feasible way though. I’m more wondering why the OP even wants a house of that age, especially since no children are planned (also a bold statement at such a young age).

2 cars to get to work? That’s purely speculation for now. The purchase price is not low, which suggests an urban area. Neither my wife nor I drive to work, even though we have a car for private purposes. Even if we did, young people like them can also manage with used small cars. If it doesn’t have to be a leased Mercedes right away, these are not necessarily huge expenses.

The renovation does not have to be done immediately but can at least partially be done successively. Two people hardly need all the rooms in a house. So liquidity doesn’t have to be fully available today. I wouldn’t advise such an approach for a family, but a young couple doesn’t have to start with a €30,000 fitted kitchen today. The same applies to the bathrooms. You can start with the old stuff and replace the first bathroom after a few years, etc.

Even a €500k loan, why not? That probably means a monthly rate of €2,500. That leaves €2,500, which is quite enough to live on, if you don’t want to swap student standard immediately for a luxury lifestyle.

Some here just have their dream picture of a turnkey town villa, 2 SUVs, and 2 big annual vacations in mind. The daughter is driven to piano lessons, the son to tennis. There’s no time left for DIY and compromises in living arrangements have long been gone by mid-40s.

I can’t understand the sense of a house at that age. But only at that age can you still accept the compromises needed to turn such a house into a gem over the years. Others that age still live in shabby shared apartments where the bathrooms are already 50 years old, if not older.

What is clear, however, is that the OP must be aware of the necessary compromises and not expect to move into a renovated showpiece within a few months.

Seriously? €2.5k installment to the bank plus ancillary costs (old building) of easily €500. That leaves €2k for living expenses. What will those two do when children come? Food bank?

No, those days are really over. It’s obviously bitter, because 2-3 years ago people here with a net income of €5k could still push through new builds with financing needs of €600k. But yes, life is not always that fair.

I would have been happy at 23 to have had 1k to live on. Back then, I maybe had half of that. Why can’t you live like a student at 23? If you do that, then you have 1k every month with which you can carry out renovations. Except for electrical and gas-water work, continuously do it yourself. Youth can calmly try their hand at craftsmanship. Without a family, there should also be time for that. With children, of course, it no longer works financially. But they don’t want children anyway, and even if they change their minds about that, there are still several years left to save capital.

What do you think, how did people at 30 save their 200k equity? They simply largely continued their student lifestyle. Whether I live spartanically and pay into ETFs and later use that as equity or directly pay off my loan through massive savings is basically irrelevant.

Of course, if you say no to every risk, you will almost always remain a tenant. An average person is rarely so solvent that they have an answer to all risks. Realistically, there will be no financial problems if we have a frugal couple. With each year it will get easier for them. More problematic will be that the bank assumes a consumption level in the household calculation that is not necessarily realistic for a 23-year-old.

The much bigger risk, though, is that they only have foolish ideas in their heads here and got together too early, and sooner or later a divorce will be imminent. But most other financings also have no answer to that. They just collapse then.