Buying Real Estate!? - Planning and Decision Making

Good day and hello everyone,

Some time ago I registered here in the forum to first gather information and read experience reports.

Now we have the opportunity to get a solid house including land and consequently many things are becoming more concrete. I would like to have your neutral assessments on whether buying a property at this point in time would be advisable.

This point in time looks as follows:

He, 29 years old, permanently employed, public service, 2200 net (plus 14 salaries plus bonus)
She, 28 years old, permanently employed, 2500 net
No children (we want them, but currently not planned), not married

3 small building savings contracts (currently only used for "saving") 15,000
1 BS (was concluded for a possible follow-up financing and to secure interest rate) is currently being saved with 300€
35,000 equity (immediately available) + 15,000 in building savings contract
No loans or similar

Purchase plan 300,000 including fees + 35,000 renovation + 30,000 (furniture, kitchen etc.)

We have already obtained some offers for a loan: In short, a loan is certainly possible, but we are currently advised not to buy a property. It was advised to save more equity.

I am grateful for any advice :-)
Regards

So you have equity for the incidental purchase costs and need money for purchase, renovation, and luxury furniture? At least furniture poses a problem. That should be equity.

So you have equity for the ancillary purchase costs and need money for purchase, renovation, and luxury furniture?

At least furniture is a problem. That should be equity

Equity is around 50K, renovation around 35K (floors, walls, bathrooms, etc.) would still be included in the loan and 30K for furniture, kitchen, etc. we could pay in cash or theoretically finance at the furniture store/kitchen specialist market (for example)

You have €50,000 equity, of which €35,000 goes for furniture, as these cannot be financed. Then, the additional purchase costs of around €25-30,000, which have to come from the equity, are included in the €300,000 house costs. The renovation will also not necessarily be fully financed – it depends on the bank and what exactly is being renovated. As a result, you are requesting financing with a loan-to-value ratio of over 100%. Surely, you can find a financing partner who does this, e.g., against additional collateral or by artificially presenting the equity through an (expensive) consumer loan. However, this is by no means recommended. Continue saving or at least bring enough equity to finance a clean 100%. Furniture and kitchen for €35,000 could perhaps be a bit smaller ... but you cannot expect great conditions. I would leave it, you still have a few years ;-) (I would throw the BVS in the bin and avoid the banker who tries to sell you a large building society contract for follow-up financing in the future, even though no financing exists)

We have already obtained several offers for a loan:

Where did you get the offers?

You have €50,000 in equity, of which €35,000 goes towards furniture, as these cannot be financed. Then, in the €300,000 house costs, the incidental purchase costs are included, which are also around €25,000–30,000 that would have to come from equity. The renovation will not necessarily be fully financed either – it depends on the bank and exactly what is being renovated. As a result, you are applying for financing with >100% loan-to-value. You can certainly find a financing partner who does such a thing, e.g. against additional collateral or by artificially representing the equity with an (expensive) consumer loan. However, this is by no means advisable.

Continue saving or at least bring enough equity to finance a full 100%. Maybe the furniture and kitchen for €35,000 could be a bit smaller ... but you shouldn’t expect great conditions. I would leave it, you still have a few years ;-)
(I would throw the BVS in the trash and avoid the banker who tries to sell you a big home savings contract for follow-up financing when there is no financing in place)

That’s the situation, correct. Furniture and kitchen can’t be a bit smaller since we don’t want to take anything from our current apartment. The kitchen is standard with about €15,000 as well.

Would you briefly explain why the “big” home savings contract is supposed to be bad? Briefly: €100,000 home savings sum, 1% interest, 2.2% fixed interest rate, can be used from €40,000 savings, 0.5% commission (Signal Iduna) Thank you