Can we afford our dream house?

Hello everyone,

my partner and I want to build our dream house and would like your assessment of whether we can afford it. The house is a Kfw70 semi-detached house in an eastern suburb of Munich.

Here are the framework conditions:

Salary 1
Monthly €2,500 net + annual bonus of €15,000 net (average of the last 3 years)
Salary 2
Monthly €2,500 net + annual bonus of €8,000 net (average of the last 3 years). The salary will increase to €4,000 in about 3 years when part-time ends due to parental leave. Bonus remains the same)

Retirement provision is covered by the companies. Per partner approximately €300 monthly paid by the company.
Both partners have company cars so no costs arise here
Child benefit is added

Current expenses
Daycare - €350 monthly
Loan for existing condominium - €1,000 monthly (financing runs for another 5 years and will then be paid off). (€80,000 equity is available for repayment and should not flow into the house financing)
Living expenses - approx. €800
Telecommunication costs - none as one partner works from home office and they are covered by the company

The condominium (5 years old) will be kept and rented out (approx. €800 cold rent)

Costs for the house purchase:

Land €285,000 - paid from equity
Incidental land purchase costs approx. €38,000 - paid from equity
Additional building costs approx. €40,000 - paid from equity
House costs approx. €355,000 - to be financed
Buffer for extras €25,000 - to be financed
Kitchen €20,000 - paid from equity
Fireplace €15,000 - paid from equity
Additional equity buffer - €10,000

So we need approx. €380,000 from the bank. The condominium should be kept.

We are calculating with monthly installments of approx. €1,400 and want to use the bonus for special repayments to pay off quickly.

What is your assessment of the financing?

Thanks for your feedback

Tony

Hello!

What do you want to hear? In my opinion, you are the dream clients of any bank! A lot of equity & sufficient income (even with part-time).

You should definitely involve a broker. Given the conditions, I would choose a fixed term of 10, a maximum of 15 years. KFW funds for the 70er program are a MUST.

If you can't afford it, then who can?
Although I just can't wrap my head around the Munich prices. For €285,000.00, you could get an entire development area here.

KfW funds ended up being more expensive for me than the loan from the house bank. Also, a rigid plan - no special repayments or anything like that. After the parental leave period ends, you surely want to make higher repayments, and once the current loan is paid off, more funds will become available. You simply can't get such flexible financing with KfW or other public programs. But the interest rates are so low anyway that you don’t really need special programs.

Kfw Mittel waren bei mir letztendlich teurer als das Darlehen der Hausbank.

You certainly used the home ownership program. In that case, the 70 program is unbeatable in terms of conditions.

@ HilfeHilfe Thank you for your assessment. We definitely want to involve a broker, and of course also use [Kfw]. We don't plan to go longer than 10-15 years. The plan is to repay as much as possible through special repayments using the annual bonuses.

We already thought that the financing situation looks quite good at the moment. We are more worried about what happens if a second child comes along or if a salary is lost. We would have to bridge that for a certain period, but if it takes longer, it will be difficult.

@ Waldorf Yes, the prices in Munich are really crazy. Although we are still lucky because we only paid around 515€/m². Normally, the price here is around 900-1000 €. We are aware that it is doable at this point. The question we ask ourselves is what happens if a job is lost or if another child is born.

Hello,

from the age of 10 years you have the right according to Baugesetzbuch §389 to repay a loan early without prepayment penalty after 10.5 years anyway