Buying land now and building a house in 1-3 years - financing tips

Hello everyone,

my wife and I have found a plot of land that we would like to buy or will buy.
We want to build on it in 1 to 3 years, the schedule is not quite clear yet...

I would be happy if you have tips and ideas regarding financing or strategy?

Me, 32 years old, 3000 net including company car
Wife, 26 years old, doctoral candidate, 2000 net at 65%, from the end of 2024 then 100% and probably a higher classification in the public service
Current rent: 740€ warm
Equity capital 150,000€
Available capital in the family: 75,000€
Possibility to encumber the parents’ plot and house as collateral

Plot:
1,500 sqm with 450€ reference value, not divisible, development plan available
320,000€ plus 43,000€ ancillary costs

House:
Not yet planned, but we are thinking of a 450,000€ budget for it.
We want to contribute our own work, especially since there are some craftsmen in the family (windows, civil engineering, electrical) and we are handy ourselves.

We have talked to various financiers about the plot and they all offer a classic loan with just under 4% or a combination of an interest-only loan plus building savings contract.

Our concerns are the commitment to a bank with such a "long" contract due to the encumbrance of our plot. Especially because we will only tackle the financing of the house later.

Is it sensible to gather all capital together and possibly still take out a loan on my parents’ plot so that we can buy the plot without a bank and without encumbrance?

What would be your idea or recommendation for us?

Thank you and best regards!

Are you planning your break through [Kindergeld]? How big should the house be? It could then get tight … 225,000 equity with 360,000 land 450,000 house = 810,000 - 225,000 585,000 to finance at 4% = 1,950 interest per month and 975 repayment at 2%, i.e., the monthly burden is just under 2,800 eur

Children are currently not firmly planned, but one is certainly possible.

House size about 120 to 150 sqm. Unfortunately, we have not thought about any planning yet.

We are very aware that it will unfortunately be tight. For this reason, we have also delayed the house construction somewhat.

We are fortunate that our family can and will support us a little, hence also the chapter about the family and the possibility of perhaps placing a burden on a parents' house.

Our question is, especially in this constellation, with which strategy one approaches the two projects staggered in time?

Have you ever had the bank calculate what kind of monthly payment you would currently have with a house? 1-3 years is not a long time. 1 year goes by quickly until the house is planned and then construction begins. No one knows what will happen with prices and interest rates. If interest rates continue to rise, building earlier might be better. I don’t know how your salaries will develop in the next few years, but before buying the plot of land, you should be sure that you will also be able to finance the house. Burdening parents' house can also go wrong, especially if financing is already tight. I would think about that carefully. Isn’t there a smaller plot of land you can buy?

Given your described profile, I would normally have recommended building a small house now, which would be sufficient for you with the first and still small second child, and to tackle the second house in about ten years. However, the size of the plot prevents me from doing so and varies the strategy: namely to build a house with a turnkey ground floor and an expansion reserve attic/upper floor. So for example on the ground floor with a guest room temporarily used as a children's room as soon as K1 arrives, then gradually the attic/upper floor is expanded. Whether partially in-house effort or as a turnkey second construction phase, both are possible.

In any case, I advise you to "build now" (you can also contact me for that), since waiting is currently not a sensible option. If you go to the architect now, moving in can only be arranged in 2025 solely due to delivery times / craftsman availability, and further delaying time is completely unnecessary. After bark beetle, corona, and Putin, other things will come that steadily increase building costs. And your equity situation is already sufficiently favorable now, which is why I

Unfortunately, we are very aware that it is tight. For this reason, we have also postponed the house construction a little.

cannot understand.

Children are currently not fixedly planned, but one is certainly possible.
House size about 120 to 150 sqm. Unfortunately, we have no planning ideas in mind yet.

This is a good, reasonable size that does not contaminate the plot with an unreasonably tiny house. So we are talking about approximately 100 sqm (for the "one-and-a-half-story") or 75 sqm (for the "city villa") on the ground floor (excluding the utility room, which can also go into the attic/upper floor). I am happy to support with the exact implementation strategy.

Waiting costs time and money, and the house can grow with the family planning. It’s not rocket science ;-)

Our concern is the commitment to a bank with such a "long" contract due to the encumbrance of our property. Especially since we will only start financing the house later.

Our question is, especially in this constellation, what strategy should be taken for the two projects that are staggered in time?

Conclusion of my post #5: eliminate in my opinion the error in thinking with the split of the property/house financing and the problem basically created by yourself will dissolve. Approach the couple- or couple-with-small-child house without artificial delay and let it grow with the family.