Construction financing over 700k - Is the offer okay?

  • Erstellt am 2021-06-04 20:08:43

BackSteinGotik

2021-06-05 16:15:30
  • #1
I see the low land costs here rather as problematic. The only possibly valuable part of the project is super cheap. The rest, purchased today at absolute boom peak prices, can quite well lose value..
 

Myrna_Loy

2021-06-05 17:44:12
  • #2
 

bowbow91

2021-06-05 17:47:49
  • #3


The question is which rate is appropriate. I simply say that the theoretical loan term is before the expected retirement age. That this is not the right decision for everyone individually is clear.

I also consider it legitimate not to be finished paying off by retirement… If someone in their early 60s still has a remaining debt of 100k, they can sell the house and possibly still have enough surplus for a nice retirement in a small apartment. Often the house is way too big at that age anyway. This happened recently in my circle of acquaintances…

If development continues as it has so far, in a few years, with the exception of a wealthy minority, debt-free retirement will be the exception for homeowners.
 

Zaba12

2021-06-05 18:12:51
  • #4
I did write 4-5% annuity. In the early 2000s/2010s it was even a "straight" 5%. That was considered healthy back then. Today no one thinks about that because the sums are so high and no one trusts themselves to pay off such a high principal anymore, or salaries have not increased as much in the last 5 years as the loans. Besides, people want to continue to consume and live as before.

Otherwise, I completely agree with you, there will always be a way out after 10 years of repayment.
 

bowbow91

2021-06-05 19:31:36
  • #5


Unfortunately, 5% is unrealistic for many people nowadays. With a rate of €1800, that corresponds to €432,000. Here in the south, you can't build much or anything with that.

With a low risk tolerance, 4% is certainly appropriate, I agree with you there. But with their €700k, the two won't manage without both continuing to work 100%.

One suggestion has already been made: downsize.

But there are alternatives (with the resulting consequences). Hence the suggestion to reduce the loan amount through more equity, etc., then they could go for 3.5% and roughly reach their €1800 rate.

I would want to avoid the full €700k in this scenario.
 

Zaba12

2021-06-05 19:54:44
  • #6
In the south where I am, even when I built, they didn’t anymore :cool:

But then you also have to realize/noticethat either you have too little equity or simply earn too little for this amount, or both, or that the amount is simply too high. That brings us back to downsizing :-). But very few have this insight and deceive themselves with a disproportionate rate compared to the loan.

That is what I mean.
 

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