Credit limit and equity too low?

Hello,

at the moment my wife and I are visiting prefabricated houses in so-called parks. There we mostly hear about construction costs averaging 300,000 euros. That is a sum we could never manage and we are currently a bit depressed.

We have a credit limit of 170,000 euros (without land purchase, which we have) plus almost 20,000 euros in equity. We want to have a simple prefabricated house built, without any frills. It should have a maximum of 130 sqm and be two stories. A half basement and a single garage, which together should cost up to 40,000 euros everywhere.

My question therefore is, do we really have to bury our house-building dreams for now?

For €180,000 a house including additional construction costs, basement and garage. I don’t think so. If you only think of additional house costs, interior finishing, garage, basement and tough times, €90,000 to €100,000 are easily gone. That leaves €80,000 for a house from the floor slab. How much house do you get for that money?

Does the bank set this credit limit for you or do you set it yourself (which is reasonable)? If yes, that suggests self-employment or a "low" household income.

Yes, we determine the credit limit ourselves based on the interest/principal repayments to be paid. We only want to spend what we can realistically afford in the long term. Your last sentence is a bit of both.

Hello

how is your personal situation? Income, age, employed, children, savings rate?

Existing property is not an option?

That won't work.

I don't know anything yet.

But it sounds like "it's going to be very tight."

But the facts would have to be laid out. Maybe he has 5000 net monthly, but only wanted to pay 500. ;-)