Construction financing possible for young civil servants

Hello!

I have now gathered quite a bit of information on the topic of construction financing here and in other forums as well as on various websites. However, since there are still uncertainties, I hope to hear some opinions from different people here in order to have a better basis for decision-making.

About me: I am 22 years old and a civil servant on probation. Conservatively calculated, I come to at least €2,200 net per month. At the moment, I live with my girlfriend in a 50m² apartment (€240 cold rent, €200 additional costs). However, this apartment is clearly too small, and the property management is not very pleasant either. So a move is desired.

Currently, I have about €900-1000 "left over" every month. My girlfriend does not contribute to the rent.

In my opinion, I now have three alternatives:

1. Look for a larger rental apartment
2. Buy a condominium
3. Buy a townhouse/ new townhouse construction

Regarding 1.: A reasonable apartment (about 70 m², 3 rooms) would cost me at least €500 cold rent. These are often old apartments with poor energy efficiency, so the additional costs would also be over €300.

2.: This would have the advantage for me that I would not "lose" at least €500 per month in rent. In addition, the apartment could be renovated (e.g., own kitchen) as I would like. The problem is that decent apartments cost significantly (at least) around €200,000. I also don’t yet know the renovation status of the property. The monthly homeowners’ association fee is also over €300 due to the age of the property (including additional costs).

3.: In my opinion, this alternative offers the advantage that the money I would have to pay monthly rent could instead be used to repay the loan. I can also convert/build the house as I would like. The question remains whether to buy used or new: I have seen that comparable townhouses cost around €200,000 (including broker fees). The new construction including land costs about €225,000 + additional costs (which will be paid through equity). In my opinion, the advantage here is that I would have a new house with good energy efficiency, where hopefully no defects should arise at first.

Now the question for me is whether it makes sense to build a new townhouse, as this is my preferred option. I want to calculate in such a way that I can pay the financing alone, even if my girlfriend does participate. However, I do not want to take any risks. I would want to set the monthly rate at about €800, maybe a little more.

I would be happy to exchange some thoughts on this topic.

Regards

22 is still very young to invest in property. If anything, in your case I would tend to opt for a condominium. But!

1. Are you a state or federal civil servant? As a state civil servant in Bremen, transfers are naturally manageable; as a federal civil servant, you could, for example, also end up in beautiful BaWü...

2. How long are you still in the probation period? I would possibly wait that out and meanwhile continue to save equity.

3. If you buy an apartment, pay attention to a good location and a reasonable price. I would look for a maximum of 3 rooms and not too old. And then make sure you can pay it off in 10 years. You have to educate yourself about the price levels and locations in Bremen.

In my opinion, 2-room apartments are not the worst alternative for young civil servants in metropolitan areas. If I were a young civil servant today in, for example, Stuttgart, I would probably do it that way. Because if you then start a family in your late 20s or early 30s, the apartment can already be paid off with some consistency and can then be sold or rented out.

But it all depends on your personal situation.

A terraced house is more for families. In my early 20s, I wouldn’t have wanted to live in a boring terraced house, with gardening and who knows what. Rather a stylish, city-near condo.

PS In your early 20s, the girlfriend can also change again. But she can also be the woman for life. Also keep that in mind.

Thank you first of all for the reply!

1.: I am a civil servant at the state level. This has also led me to consider acquiring property already now, since theoretically (aside from personal preferences) I no longer have to move.

2.: I am at the beginning of the probationary period, so about 2 years left.

3.: That is where the problem lies: the apartments are simply very expensive and also come with a certain risk.

Now my consideration is that it is relatively difficult (not lucrative) to save equity at the moment. At the same time, interest rates are falling continuously. Although I am trying to read up on the subject, the connections are quite complex. I simply have the fear that the interest rate will rise again and that I will ultimately have to pay more.

Sure, that sounds prudish at first – but I do see advantages in it. For example, there is more parking space available and the residential environment is more attractive (e.g. not so dirty). The terraced houses relevant to me are also located in such a way that I would have only minimally longer routes. That is more than within an acceptable range.

I am quite aware of that – since I cannot look into the future, I want to be able to manage the project alone so that I do not get into financial difficulties.

Are your 2,200 net already after deducting the private health insurance [PKV]? Have you included shift allowances? I skimmed through the tables in Bremen briefly, but I just don't quite get it with 22 years. I assume you are still paid according to level A..

If you buy a terraced house, it should already be family-friendly. So you’re looking at 120 sqm upwards, 2 children's rooms and so on. If you can already use the space now, fine. But I find it very big, even though I understand your way of thinking regarding maintenance and energy costs.

The tip for all real estate beginners is anyway this: keep a household budget, specifically set aside the "rest" and thus create more equity simultaneously while you scout the market and weigh the pros and cons. It takes 1-2 years at least until you find or build the right property. I've been looking for "our" house for 5 years now. Meanwhile the apartment is almost paid off. And when the time comes, it can be sold or rented out.

So, don’t rush and save nicely. In 2 years the interest rates won’t be significantly higher. Surely still below 3%, I’ll just say that after looking into the crystal ball.

New building including land for 225000? Seems more like a lure offer from the internet, to which you can gladly add another 50000. Then add additional construction costs... A civil servant on probation wouldn't be much of a risk now, but at the young age of 22, being unmarried, a transfer within the country can easily happen...

Whereas that is really manageable as a civil servant in Bremen.....compared to BaWü or Bavaria....