Buying a house without equity at a relatively young age

Here wurden jahrelang

Buyers could also repay more and better with better conditions. What counts is the "financing package," which naturally includes the present and the security of the borrower. Comparisons with "back then, but," earlier and today are pointless.

Why can't the additional purchase costs be financed.

Of course they can, but at the conditions of a consumer loan. What is the current rate? 8% + x% repayment? Additional purchase costs, kitchen, and possibly a few more pieces of furniture would have to be financed like this. Are there really still people who consider this a healthy financing? It may be that with low interest rates you can turn a blind eye, but as a general rule, the mantra remains that you must bring at least the additional purchase costs as equity.

So about 1.5 years ago, we also financed 110%. Both in our late 20s and earning 5,000 net at that time. However, with 2% repayment and 2.4% interest. The Volksbank just agreed to that without much discussion. I don’t know how it looks today, but make appointments and see what the banks say. Our advisor calculated everything back then, including parental leave, unemployment benefits, and so on. We also did it ourselves again and decided that it was feasible for us with a 1970€ rate. But to be honest, it was already tight, but doable. Meanwhile, each of us earns 300€ more net and with that, life is pretty comfortable. Moving in is in two weeks and with interest + rent, we currently pay even a bit more than we will later in the house.

But to be honest, with a rate of more than 2,000€, we would have shelved the dream for the time being. That really was our absolute pain threshold and you have to be honest with yourself. I would recommend you to do a household budget. Make a few Excel sheets and see what is possible for you. Of course, you can live well on a small budget, but I would plan at least 500-600€ pocket money per person for consumption expenses (shopping, eating out, cinema, clothes, activities), besides all other costs. Also don’t underestimate how much money will go to spontaneous purchases, especially in the beginning. Tools, non-financeable fees, mailbox, plant here, piece of furniture there. We solved it so that each of us has 850€ pocket money and can spend that freely. We simply take turns doing the shopping. Everything else goes into the joint account. This way, after fixed costs, we still save around 300-500€ a month.

That brings us to the 40,000€ you have budgeted for renovations. You will never get by with that. Alone for the above-mentioned “small things” we have paid 5,000€ since signing and we are basically building turnkey. The kitchen is also rather around 10k-15k. I would still plan at least 20,000€ as a buffer.

So I find it a bit harsh to accuse the OP now of not wanting children. You might hardly believe it, but there really are people who from the very beginning do not want children and consistently stick to that. I find that completely legitimate.

On the topic: If you want a house so young, which I don't find bad at all (it was the same for me), then you have to think carefully about what you need and what you want. Is this property such your dream house that the effort and restrictions are worth it? If not, maybe look for something else (without a granny flat). Maybe you also want to say a little more about the house.

Otherwise yes, the renovation costs are set way too low. You can easily triple that, depending on whether you have it done or do it yourself.

The feasibility of financing is determined by the bank.

Sure you can do that, but on the terms of a consumer loan. What’s the current rate? 8% + x% repayment? Additional purchase costs, kitchen, and maybe a few more pieces of furniture would have to be financed like that. Are there really still people who consider that to be sound financing?

It may be that you can overlook that with cheap interest rates, but as a general rule, the slogan remains that you must bring at least the additional purchase costs as equity.

Whether I now save my capital for the kitchen with an 8% ETF return (yes, after taxes that is probably an exaggeration) or I jump in immediately and pay 8% interest, it’s ultimately the same. With the saving option, I more likely run the risk that inflation gets out of control and price increases are often in the range of the nominal interest rate. Then I would have been better off buying immediately. Yes, stocks are risky in the short term. But what is without risk? Throughout all threads there is almost this idea that saving only works with instant access accounts. Anyone who thinks like that will of course never be able to save enough equity.

Where I agree: The attractiveness of equity investments has clearly increased compared to loan financing. In the past, it was really stupid at times to sell stocks to finance a house, car, or furniture. Today I would also say, better sell, because at 4% (secured) or 8% (unsecured) you no longer have to endure the uncertain interest rate spread business and the investment in stocks. But if someone has not built up any equity at all yet, they don’t necessarily have to wait a few more years. That only runs the risk that consumer and construction prices get away from you. With loan financing, at least you already have cost predictability. So if the credit line fits, why not? You already have something from the kitchen today instead of tomorrow, but not from the stock portfolio.

I would save for another 2-3 years in your place. About as much as the current rate would be.

I also estimate that the 40,000 k is too little if bathrooms are still included.