Construction financing - what can we afford?

Hello dear forum community,

we (m 29 and f 29) are currently dreaming (like so many others) of building a house.
A few facts about us:

- both teachers (civil servants) full-time
- almost €6000 net, minus private health insurance leaves around €5500
- currently renting (€700 cold rent)
- so far childless (we would like to have a first child in the next 2-3 years and then a second child in the following years. My wife would like to go back to full-time work after one year each, God willing and if our wishes in this regard come true)
- no outstanding loans
- so far almost €25,000 equity (increasing by €2500 monthly)

After a long search, we have finally found a suitable plot of land and obtained an option for it until 30.06.

Our thoughts on this:

- The plot costs around €165,000 including ancillary acquisition costs
- We would like to build a single-family house with around 170m² (including basement) and estimate €350,000 for this
- It is a hillside plot (solid rock) with an 11m incline over 30m

Unfortunately, we lack corresponding experience here and are therefore more or less fishing in the dark regarding the expected additional costs. (Contact with an architect will follow in the coming days)
We estimate: approx. €15,000 for the retaining wall, €40,000 for the double garage, €20,000 for an access road (garage is to be set about 2 meters higher), €40,000 for the outdoor area, €20,000 for photovoltaics.

This brings us to roughly €650,000 (!)

Financing:
For financing, we assume the following values:
- €2000 monthly
- 1.8% effective annual interest, 2% repayment (possible KfW funding not included)
- Interest fixed for 20 years
- Special repayments up to €10,000 per year
- Loan repayment end after approx. 35 years
- Securities by profession and conclusion of a risk life insurance (RLV)

Our questions:

Our household budget allows for just under €1000 margin for the (certainly upcoming in the next years) financing of 2 cars (and other things). Added to that would be (as mentioned, God willing) about €400 child benefit. However, our gut feeling says that we risk overextending ourselves with such a financing sum. What do you think?

Where do you currently see major mistakes in our planning? What are we overlooking? Where are we too naïve?

Many thanks for reading and best regards from Ostalb!

For us, a house with about 40 m² less, also with a basement but without a slope and rock, costs about the same, with even some own contributions included.

The costs for the house could be tight at that size. Especially the construction of a basement into the rock or in rocky soil can become really expensive. I basically consider the appraisal to be exaggerated, but for you it could actually be enlightening.

I would reduce the monthly rate by a quarter and instead work more with special repayments. The total sum is already enormous, the house bank can certainly provide an assessment in an initial conversation about the maximum amount that can be financed and the rate expected. Maybe own contributions or simply not doing everything at once will also help you. €40,000 for exterior facilities is quite a figure, and you certainly don’t need to have it perfectly developed from the start in order to live in the house.

I guess the tone is borderline up to you overextending yourselves.

170m²

How big is the basement?

Where do you currently see major errors in the planning?

Children! Children cost more than child benefits. Children are also not insured under private health insurance for free; even if, thanks to subsidies, you only have to pay a little.

In addition, loss of earnings must be expected, at least in the first 1-3 years. Daycare places don’t just fall from the sky.

2000€ monthly
- 1.8% effective annual interest, 2% repayment (possible KFW subsidy not

Where did you get these conditions from? Already been to a bank or broker?
I come up with a loan-to-value ratio of 96-98%, so your favorable conditions don’t quite fit.

Where did you get these conditions from? Have you already been to the bank or broker? I come to a loan-to-value ratio of 96-98%, which doesn't quite match your favorable conditions.

I agree. For a similar loan at 100% loan-to-value, I had to go to 4% repayment to get 1.7% for 15 years. But I am not a civil servant, just an employee.

hello,

I assume you are financing through an insurance (Allianz or similar). 650k with 5,500 net income without children but desire for children. Phew... it’s getting tighter and the loan higher. Another thread was 485k with 5,850 net income.

also with the rock and 15k retaining wall sounds ambitious....

Somehow the ancillary construction costs are missing in the entire calculation. I only find the 15K€ for the retaining wall.