Can we get a loan of 250K from the bank?

Hello,

my girlfriend (soon to be my wife) is planning to buy a house in about 3 years to renovate it or possibly build one, we don't know yet. The loan amount would be estimated at 250,000 euros.

My income per month is currently 1,645 euros net and additionally I still receive a 13th month's salary. If the numbers are good, two more monthly salaries are paid as a bonus distributed throughout the year. So I definitely receive 13 monthly salaries and if things go well 15 monthly salaries.

My salary will definitely increase in the next 3 years, but if we assume the current situation and I take the favorable tax class, I would have 1,900 euros net and if my wife also works for 400 euros, we would come to 2,300 euros. My wife will only work for 400 euros because we want to have a child then.

My wife owns half of a two-family house, which should be worth about 120,000 euros now. We renovated everything two years ago and now also live in it. We do not currently have any larger significant equity, but we are debt-free. If we move into a new house, we want to rent out the apartment again, a sale is out of the question.

What is your assessment, would one get a loan of about 250,000 euros from the bank under our circumstances?

belong in the sense of really paid off and debt-free?

if yes then the bank will be able to consider that as equity or as collateral...

250,000 at 2% repayment currently means a rate of about €1200 per month! and in 3 years the interest rate level can easily be 1-2% higher!
if you then only have €2300 net, €1100 remain for heating costs, electricity, car, food, clothing, insurance, retirement provision, repairs, etc. etc... a bit tight

and I personally would not do 1% repayment... if you cannot afford 2% then you have no leeway in emergencies...

Yes, the apartment belongs to us, so it is paid off.

You're right, we are really tight. How much total income should one approximately have available per month so that the bank usually gives an OK?

How high would the probably achievable cold rent be? Roughly add half of that to your income by rule of thumb... The rest goes for taxes and reserves.

The question is not just what the bank would give you but also what you can do without... you want to still have some life besides paying off the house.

You shouldn’t start by assuming a fixed loan amount... check what you need or have left each month and try to estimate how much you could pay to the bank monthly... but don’t calculate too tight! Plan for a new car/TV/etc. every few years as well as repairs! Also, don’t completely forget retirement provision...

With this amount, now see what loan amount you could get... but better with 2% repayment and not just 1%... with 1% you of course get a significantly larger loan, but at the end of the interest rate lock period you will have paid off almost nothing and could get into real trouble if interest rates rise significantly! And eventually you want to be finished paying off...

By the way, I would seriously consider whether it might be more worthwhile to sell the old house then... with an interest rate of 4%, that would be an additional burden of €400 per month due to the €120,000 if you borrow it from the bank instead of financing it from the sale of the house... you first have to recover these €400 through rent... depending on the condition of the house and upcoming repairs that is not necessarily guaranteed and you also have a lot of work with it... and woe if there is rent loss for a few months...

Thank you very much for the response, that is definitely a wise approach. We actually did not want to include the rental income as part of our income because previously we had tenants who completely neglected our apartment and we really had problems getting the rent from them regularly. Therefore, we had not planned to rely on the rental income at all, to have a buffer in case we had bad luck with tenants again.

Ok, but that would significantly simplify the whole thing. That would be a safety buffer that can be planned in and that provides a good reserve.

Hello,
we have now found out that the two-family house belonging to my wife and her brother is registered as a condominium community or jointly as owners. In other words, one apartment (value approx. 120,000 euros) belongs to us and the other apartment (value approx. 70,000 euros) belongs to her brother. Is it even possible to declare our share or her apartment as equity with the bank if the entire house is registered as a condominium community?