Condominium for 460,000 euros and a 37-year loan term?

Now take it easy, folks.
The financing is doable, though not without challenges.
The reason is the decent equity capital.
That takes the pressure off, even if the thing should fall apart after the fixed interest period, well then he sells the place and that’s it.
Sure, it’s not a comfortable financing, but renting a five-room apartment probably isn’t a real alternative either.

I’m now assuming a loan amount of €360,000.
Two options
a) riskier and cheaper:
15 years fixed interest, 2.5% repayment, 1.6% interest:
€1221 installment, €207,891 remaining debt, interest costs €67,671.
b) safer and more expensive:
30 years fixed interest, 2% repayment, 2.33% interest:
€1287 installment, remaining debt €49,852, interest costs €153,172.

With a) you’re betting on high inflation and continued low interest rates, with b) you’re pretty safe, the remaining debt can still be covered cheaply in 20 years with a small home savings contract.

If you go with a) and interest rates are at 8% in 15 years, well then you just sell. Property prices will certainly fall again with rising interest rates, but not so low that you won’t at least come out with a clean slate, in my opinion more likely is value retention / growth with moderately increased interest rates.

It might also be interesting how the incomes are split. Is most of it with you or your wife?
Do you still have relatives who could help out in case of emergency?

I repeat myself: it’s not without risk and you have to have a certain confidence in yourself and the future development, but it’s doable.
In the end, the decisive factor is your own risk tolerance.

Now take it easy, guys. The financing is doable, even if not without challenges. The reason is solid equity. That takes the pressure off, even if the thing should blow up after the fixed interest period, well then he just sells the place and that's it. Sure, it’s not a comfortable financing, but renting a five-room apartment probably isn’t a real alternative either.

I’ll assume a loan amount of €360,000. Two options: a) riskier and cheaper: 15 years fixed interest, 2.5% repayment, 1.6% interest: €1,221 installment, €207,891 remaining debt, interest costs €67,671. b) safer and more expensive: 30 years fixed interest, 2% repayment, 2.33% interest: €1,287 installment, remaining debt €49,852, interest costs €153,172.

With a), you’re betting on high inflation and still low interest rates; with b), you’re quite safe, the remaining debt can still be cheaply secured in 20 years with a small building savings contract.

If you go with a) and interest rates are 8% in 15 years, well then you just sell. Property prices will certainly go down again with rising interest rates, but not so low that you don’t come out at least with a clean slate; in my opinion, a value retention/gain with moderately increased interest rates is more likely.

It might also be interesting how the income is divided. Is most with you or your wife? Do you have relatives who could help if needed?

I repeat myself: it’s not without risk and you have to have some trust in yourself and future developments, but it’s doable. In the end, what’s crucial is your own risk tolerance.

The OP wants to finance €460k and repay 1.5% in the first years.

€360k would not be an issue at all. But €460k with 1.5% repayment and that for at least 1.5–2 years on a salary of €3,700, since his wife is on parental leave, is not pleasant.

No one says he won’t get financing. The question is whether living so tight will be satisfying in the long run!

None of us finances owner-occupancy to get away with just a scratch if problems arise. What kind of strategy is that?

Sure, it is not a comfortable financing, but renting a five-room apartment probably isn't a real alternative either.

Why not? Would that be so much more burden per month?

No, the apartment costs 460k including renovation plus additional costs, resulting in 520k total costs.
From that, the 160k equity is deducted.
Therefore, 360k financing.

I don’t quite understand your last sentence.
Of course, no one plans that, but there are plenty of risky financings.
I just wanted to show that the risk with the equity is simply manageable.
If it were about 100% financing and 10 years fixed interest, the case "house gone / still debt" would be very likely, that is the worst case.
But in an unexpected development (here 8% interest in 15 years), being debt-free or, more likely, getting out of the situation again with the paid-in equity is not a disaster.
So completely giving up on the purchase right away? You can do that, but you don’t have to.

No, the apartment costs 460k including renovation plus ancillary costs, resulting in total costs of 520k.
From that, the 160k equity is deducted.
Therefore, 360k financing.

I don't quite understand your last sentence.
Of course, nobody plans it that way, but there are plenty of risky financings.
I just wanted to show that the risk with the equity is simply manageable.
If this were about 100% financing and a 10-year fixed interest rate, the case "house gone / still debts" would be very likely, that is the worst case.
But in an unexpected development (here 8% interest in 15 years), being debt-free or, much more likely, getting out of the situation again with the paid-in equity is not a catastrophe.
Therefore, just completely refraining from the purchase? You can do that, but you don't have to.

Oh, only 360k€. I assumed 460k€ based on the subject.

You can finance that as long as it’s certain that the wife will go back to work and not just completely relax and stay at home after parental leave.

The wife will probably reduce to 50% with two children, so she will remain on the parental allowance rate with child benefit. In other words, you will more likely end up permanently at 3700€ and pay for care for a second child.

That’s also possible... but it’s something different than carefree.

Thank you for your honest input.

The income is currently divided as follows:

- Woman: 65% / 1,800 euros. A full position would be 2,700 euros. No long-term potential for increase.
- Me: 80% / 2,200 euros. A full position would also be 2,700 euros. Long-term potential for increase.
- Child benefit: 200 euros
- Other income: 100 euros
==> as mentioned, a total of 4,300 euros / month

With a second child, my partner will probably go back to 50%; income would then be reduced by about 200 euros. I could also go to 100%, but I would be very reluctant to do that just because of the loan.

Not included are the Baukindergeld and the child benefit increase in 2019 (around 45 euros).

On the topic of long fixed interest rates: A financial advisor clearly advised against a 30-year fixed interest rate: "You are not someone who pays for 30 years." She apparently believes more in my career development than I do ( ), as well as in additional capital available in the future, keyword: inheritance. So she is of the opinion that the payment would be done well before the 30 years.

Overall, I hear that the project is basically feasible, but not entirely without risk, mainly because the incomes are not high enough and therefore the repayment would require a high level of discipline (I am basically disciplined, but you will agree with me that expenses in a family are not as easy to control and predict as when single).

Actually, your assessments are enough for me to say, then I better let it go.

On the other hand: What alternatives do we have at the moment in big cities? With rents around 10 to 12 euros/sqm, we would come to at least the same amount for the net rent as for the loan (Sure, for that the 160T € are still there). Seen this way, I find it hard to give up the project quickly.