Construction financing?

Hello,

we are planning the construction of a KFW 55 prefabricated house. Including the plot of land (800 sqm), outdoor facilities, finishing materials, garage, kitchen and everything included, the total costs are about 300,000 euros for approximately 150 sqm of living space.

We would need about 265,000 euros. So equity & own services about 35,000 euros.

Of course, we will get the Kfw loan and an additional special loan from the state of Rhineland-Palatinate, so that with 1300 euros monthly we would pay down almost exactly 2%.

Salary his + child benefit = 2900 euros

She (pregnant for the second time) currently earns about 500 euros per month on a part-time basis, from next May then 300 euros parental allowance for one year, then no income for 2 years due to parental leave and then part-time again 500 euros, which is completely excluded from this calculation.
The 2 years will probably be tough, otherwise the 500 euros monthly would be our luxury insurance (vacation) but also the possibility to pay off the loan faster through special repayments.

He also has a variable component, which in case of success brings in about 3 gross salaries as bonuses. This was also not considered and will then serve as a goody. :-)

If I now deduct all our expenses from the salary above, including the amounts for property tax, building insurance and additional incidental costs, I am left with 60 euros in the end.

I have converted all annual expenses like car tax etc. to monthly amounts. And as mentioned assumed that my wife will never earn anything again in her life and I will never receive a cent of my variable compensation.

Then there would also be the possibility to use 3 repayment-free grace years with the KfW, which could help me to bridge the time while my wife is at home well and reduce the monthly burden during that period again.
However, it would be more reassuring for my conscience to repay at 2% from the beginning.

What do you think is feasible?

Ask your bank about a repayment change. This is then – depending on the bank – possible between 3 and 5 times during the fixed interest period.
This means, for example, you can now start with the desired 2% repayment, if your wife no longer has any income, return to the minimum repayment of 1%, and when the income situation improves again, adjust back to the desired repayment.
Thus, in addition to the special repayment options, you have the greatest possible flexibility.
However, this is not possible with the [KfW loans]. Here, you can “only” take advantage of the repayment-free start-up years.
If you have any further questions, feel free to contact me anytime.
Ms. Unger

Thank you very much, that is a very good tip. ;)

The pure bank loan would be approximately 110,000 in my case, and with 1% repayment, I would save about 100 euros per month during this period.

Since I have already calculated only with my salary above, we would then have a reserve of 160 euros monthly for the two years, and when my wife starts working again, we can immediately go back to 2% and surely also make special repayments. There is also the variable salary component.

I have included all our monthly expenses, and have always rounded them up, so although it is tight at the beginning, it should actually work out.

Now of course the question arises again: What happens if I lose my job. But this is a question that everyone has to ask themselves, unless they are a civil servant.

I work as a managing director, have a permanent contract, and can be terminated at the earliest in 3 years.

You cannot completely plan the period of a construction loan – in most cases between 20 and 30 years – nor exclude all possible risks.
The way you are doing it is basically exactly right. Check and consider all possible risks.
Of course, if you were to lose your job, the salary of the main earner would, of course, disappear.
But how long is your notice period? How do you assess your chances of finding a similarly paid job again? Would the unemployment benefits that would then be paid, and your wife’s income (who could then work more since she can take care of the children) be enough to bear the burden, at least for a short time?
I understand that you cannot answer all these questions with 100% certainty, because for that you would need a crystal ball, but if you basically have a good feeling, then the risk is low.
And in such cases, you can also fall back on the [Tilgungswechsel].
There are always risks; it only depends on how calculable they are.
Ms. Unger

Hello,

something about it can't be right.

Based on the numbers, I come to about €1000 /sqm, rather lower standard.

But that is neither a KfW55-2007 nor a KfW55-2009!

Best regards

hm, maybe the well-known company M...., just post your calculation here, then we will tell you what is wrong. As a managing director, do you have time to go to the construction site every day for a year to carry out the interior work? How much of the 35,000 € EL is equity, 10k or less?