Construction financing | Is the procedure good? Your opinion and tips

I had already written that your planned costs of €270,000 might be a bit tight. €2,000 per m2 is already very generously calculated; it was often mentioned as less. You should manage with €1,700 to €1,800 if you don’t plan any big frills. In addition, there are ancillary construction costs, outdoor facilities, etc. Bauexperte has already made detailed breakdowns several times, just read through a few threads. How many square meters you need is hard to say; it also depends on the development plan on what you are even allowed to build.

Yes, with planned 140-160m² of living space, as you say, it really becomes tight. The assumption of €2,000 per m² living space was intended as a healthy and solid figure for construction financing. I see it as a kind of average value with which you can also somewhat secure yourself. Regarding the breakdowns, I need to look at those threads again carefully. But I believe none was from Bavaria yet or I would have to look up the regional points myself again. The first thing I probably have to do, as I now see and have realized, is to explicitly look at the development plan for these plots after the measurements are finished. To check whether it also matches the requirements for the plot and to avoid a nasty surprise later on.

I just roughly calculated it for us (approx. 175sqm living space, including additional electrical equipment and photovoltaics), we come to construction costs without ancillary costs, garage, etc., of about €350,000 and thus €2,000/sqm. So it fits quite well for us.

That would then be the very good example

Only one other point puzzled me a little or made me think. Although I or we could probably manage to repay €900-1,000 monthly well, according to various sources a maximum loan of €200,000 is assumed or recommended. Thus, currently, for my plans with €70,000 equity, I am missing €80,000. That worries me a bit because I do not have 1/3 equity available as would perhaps be the optimal case. One is somewhat concerned about possibly overextending oneself. The €900-1,000 is now calculated based on one salary or mine, which I could repay monthly. They say, ideally, you should be able to repay 30% of your net salary. On the other hand, the term would extend if I were to include the €80,000 as well, or I am already calculating that after the children, with the second salary, I will always be able to pay off part through, for example, special repayments. How do you see it, or how did you calculate and decide for yourselves how much loan you can ultimately take to still live normally and have no worries?

One other point just puzzled me a bit or got me thinking. Although I or we could probably manage to repay 900-1000 euros monthly quite well, according to various sources a max loan of 200,000 euros is considered or recommended.

This statement has existed for many years and is certainly partly true. However, it should still be seen "only" as a recommendation. If you can repay 1000 € monthly, then with today's interest rates, significantly more than 200,000 € can be borrowed without having to repay for 40+ years.

That is currently causing me some headache because I do not have 1/3 equity available as might be the optimal case.

That is also a recommendation and should not cause you excessive worry. Of course, the more equity you have available, the better and safer it is, but even with less equity a "healthy" financing is possible. Nowadays it is even possible to finance without any equity at all. Whether that makes sense and whether one should take that risk is another matter.

The 900-1000 euros is now calculated on one salary, respectively on mine, which I could repay monthly. It is said, presumably, that ideally one should be able to repay 30% of net income.

That is also a recommendation. It is also said that one should not spend more than 40% of net income on the installment, but that is very individual as well (this was recently discussed in another thread here).

How do you see it, or how have you calculated and decided for yourselves how much loan you can ultimately take out to still live normally and have no worries.

That is (like many things) very individual. In the end, you (or you all) have to decide how much loan you want to take out to still be able to "sleep peacefully".
In the end, it is always a risk assessment that everyone must make for themselves. How much security do I need, what happens in a "worst-case"?
It is important that you really define a limit for yourselves – what installment are you willing to pay and at what loan amount do you still feel comfortable. Unfortunately, no one can tell you that.

I can only tell you how we did it, but certainly it was completely different with other homebuilders. We defined for ourselves (using loan calculators) the maximum loan amount we were willing to bear. There was also a definite cutoff regarding the installment and the loan term. Fortunately, everything fit together. Even though the banks would have given us a significantly higher loan and wanted to push a full repayment loan with an installment much higher than our self-imposed limit. But it is not the banks who have to feel comfortable, but you or we. In the end, we received a loan with which we can sleep peacefully and do not have to worry about what happens if one becomes unemployed over a certain period, if another child comes, if someone is sick for a longer time etc... in the worst case (certainly with some restrictions) even if someone does not work at all. We will still be finished before retirement, no matter what happens. If a special repayment here and there is possible, then we will be finished earlier, if not, then not and that would not be so bad either.

Please also consider that the 500 to 100,000 euro rule originates from a time when the interest portion was significantly larger (twice as high). Now one can certainly also calculate with 400 to 100,000, but must keep in mind that the interest rate risk can become effective at some point.

We have set a monthly rate for ourselves that can easily be managed with 1 salary and an income replacement benefit.
With 2 income replacement benefits or with only one salary, the rate would have to be borne for a certain period of time (possibly) with restrictions (e.g., no vacation, no savings/abolition of a second car). The 2% repayment + interest then proposed by the bank also matched our expectations quite closely. At least this way we can sleep peacefully.

Currently, I work 40 hours and my wife 35 hours. That comes to just over 22% rate based on net income.
With only one salary, it would then be 40-45%. As mentioned above, feasible in the short term, but not permanently.

If nothing comes up, I hope that we can pay around 35% to the bank for the first 5 years, taking into account the monthly rate and special repayments. At least it was possible in 2014 and 2015 looks positive so far. Eventually, when more savings are needed for repairs to the house, the share will decrease.

By the way, we also have 400 to 100,000.

Thanks already for your further information on this. For me, it is simply difficult at the moment to estimate the costs of a house with, for example, 140m² or 160m². I am not yet far enough along in the topic regarding prices of houses, etc. That is why I am simply lacking a bit of intuition to be able to estimate the required or feasible loan. Hmm.. as you already say, 400 € on 100,000 € loan. I don’t know to what extent it is possible with a salary and an 800 € loan and after moving into the house, for example with one child or two children plus water, electricity, and all the other additional costs, to manage that. Of course, the focus is that the woman will go back to work again promptly after the first or second child, but this time period also has to be managed. This is currently causing me a bit of headache, since one is going into preliminary planning with a certain figure of, for example, 250,000 € or less.

We received the 14 months of parental allowance. That is at least 65% of the net income. If you smartly switch the tax classes beforehand, it is even more (provided you are married until then).

As far as the income is concerned, I am quite aware of that. From what I have understood, financing is generally calculated based on one person only, and that is what I have done in my calculations so far. Currently, I was told that with about 800-900 euros of my personal income, one can expect a monthly burden or manage this amount.

We and many others certainly would not have been able to build if we had only counted on one salary.