Buying land or saving more?

Is this THE dream property? Are there any conditions (obligation to start construction x months after purchase)? What ongoing costs arise from owning the property?

By the way, dreams can change, properties cannot.

Thank you very much for the hint. I have an appointment today with the real estate agent from Sparkasse, who is offering the property.

What costs are coming soon due to Child1 for you? I have no idea how high the daycare/kindergarten costs are in your area or what a possible full-day school charges. For comparison: Here in Bochum we have to pay about €300/month for our daughter (2 years old) for daycare including meals. Of course, it depends on income, but since you together already earn quite well, your contribution could be similar. It’s best to inform yourselves, especially in case, as asked under point 1), more children are planned.

Fortunately, that is very low for us on Rügen. A daycare spot here costs exactly the child benefit amount of €186. The meal cost of about €40 is additional. From kindergarten (which we already have), this amount drops again to currently €118 + meals.

If you can answer both points accordingly for yourselves (it remains at one child and daycare costs are relatively low), I would definitely tend to buy the property with your income. Depending on how you assess your job security (under "corporation" as you wrote above, both Bayer and Karstadt fall, to take the extremes of current job security), at least I would also have a house construction calculation done currently. Interest rates can hardly get much lower. If you then build comparatively cheaply, this can definitely fit your current income.

My wife works at an internationally operating corporation for fish processing Parlevliet & Van der Plas (Netherlands).
I work in a spa administration (TVöD municipality).

Is it rather advisable to choose a short loan term for the property credit and pay it off relatively quickly or to let the loan run for a very long time to achieve a low rate and save equity on the side? In variant 2, the house installment would simply come later.

Another thought that is wandering around in my head. The later I start with the construction financing, the fewer years I have left to pay off the loan. Accordingly, the loan installment then becomes higher. Added to this are probably rising interest rates + rent paid in those years instead of investing in a house loan.

How do you see this?

Is it more sensible to choose a short term for the loan on the land and repay it relatively quickly, or to let the loan run for a very long time in order to realize a low rate and meanwhile save equity? In variant 2, the house rate would simply be added at some point.

If you decide on the "initially just land + wait to build" variant, I would choose a relatively high repayment rate so that as much as possible is repaid by the time of the actual construction financing. Corresponding to this, only a very short fixed interest period or even completely variable (or, for interest security, a cap loan, i.e. with an interest rate ceiling). At the time of the construction financing, I would then include the remaining debt of the land loan contract into the overall financing, i.e. redeem it and then stretch it over the term of the remaining construction financing. This way, you have already repaid quite a bit through the initially high rate and also have a lower rate from the actual construction financing onwards.

Another thought that is running through my head. The later I start with the construction financing, the fewer years I have left to repay the loan. Accordingly, the loan rate will be higher. In addition, there are probably rising interest rates + rent that you pay in the years instead of investing in a mortgage.

What do you think about that?

That's why I wrote that from my point of view you can certainly have a financing for "land + building now" calculated to see whether it already fits now. Yes, your equity is actually too low for that. But due to the good employment conditions, I can well imagine that you will find a bank that supports you. If you then also take on a proper repayment from the start, you will quickly be at the same remaining debt level at the current interest rate level as if you pay rent for several more years + save some equity.

If you decide on the "first just the plot + wait with construction" option, I would choose a relatively high repayment rate to have repaid as much as possible by the time of the actual construction financing. Accordingly, then only a very short fixed interest period or even completely variable (or for interest security as a cap loan, i.e. with an interest rate ceiling). At the time of financing the construction, I would then include the remaining debt of the land loan contract in the total financing, i.e. repay and then stretch over the term of the remaining construction financing. This way, you have already repaid quite a bit due to the initially high rate as well as a lower rate from the actual construction financing onward.

We took out the financing for the plot exactly because of the low interest rates with only 1% repayment and are saving in parallel. This way, we achieve a higher return than the interest on the loan. We would have liked 0% repayment.. but the bank did not agree. For 200k, we pay a ridiculous 170 EUR interest per month. At the end of 5 years, we will pay off the remaining debt with the saved amount. That is the plan :)

Regards, Steffen

The time factor should be the lesser evil for your age group.

If you wait a little longer, it certainly won’t harm you – quite the opposite, you can use this time now to check for yourselves whether, over a period of 12-24 months, there will be complications with your mortgage payment (& all monthly expenses) & the income you generate ;)

Rising interest rates or not... You’re not buying a bag of Haribo’s... You are most likely making the biggest investment of your life.

Best regards.

With this, we achieve a higher return than interest on credit.

With which risk-free investment do you achieve this return (after taxes)?

With which risk-free investment do you achieve this return (after taxes)?

risk-free of course not. If you are satisfied with ~ 2%, however, it is calculable.