Did we have too many concerns about the financing?

I have read some of the posts about financing here. I am very surprised at what some people "put themselves through." With the purchase prices, equity ratios, or monthly surpluses, I would never have thought about financing a property. At best, I would have seen the financial possibilities only in the category of a townhouse rather than a city villa in a new development area. In addition, my feeling is strengthened that today everyone wants an all-inclusive worry-free house, turnkey with all luxury, at most still wallpapering walls. In my circle of friends and acquaintances, I still see a parental generation that made their house possible with much more personal work (including structural work).

For my own project, I was very cautious compared to other posts here. Attached are the data before the purchase:

General information about you:

[*
Who are you? Married couple
[*]How old are you? 34 + 36 years
[*]Are there children? No
[*]Are children planned? Yes
[*]What do you do professionally? Employed in a subsidiary of a large automobile manufacturer in shop floor IT (software development, automation, GLT) and project manager in vehicle development of an automotive service provider
[*]How many hours do you work? 40h + 37.5h plus overtime


Income and asset situation:


[*]What income do you have (gross/net)? Net: €3,150 (13 salaries) + €3,500 (12 salaries, company pension scheme already deducted in gross)
[*]How much child benefit do you get? €0
[*]Other transfer payments such as parental allowance, sick pay, etc.?
[*]How much equity do you have? €153,000
[*]How much equity do you want to invest in the house project? As much as necessary for 80%, rest for renovation


Expense situation:
Expenses already included in other positions can of course be omitted. This list is not final and can be extended or summarized as desired. Please make sure to indicate all costs monthly, even if they occur only annually!

Housing costs:


[*]current cold rent: €1,050.00
[*]current warm rent: €1,200.00 (excluding the following amounts)
[*]Electricity: €75.00 (including electricity for hot water generation via instantaneous water heater)
[*]Gas: €75.00 (district heating, directly to the supplier, not included in warm rent)
[*]Water, sewage, garbage fees, street cleaning: included in warm rent
[*]Telephone, internet, mobile phone: €92.50 (including broadcasting fee)


Mobility costs:


[*]Monthly ticket for bus and train (also for the children!): €0.00
[*]Car loan (or savings rate for a new car): €0.00
[*]Insurance: €120.00
[*]Taxes: €37.33
[*]Fuel: €169.00
[*]Repairs: €140.00 (including other operating costs)
[*]Other
[*]Is there a second car, motorcycle, scooter? Please list all items again! The costs mentioned above are for two vehicles


Insurance costs:


[*]Private health insurance (including supplemental health insurance, daily sickness benefit, etc.): €6.74 (dental supplement)
[*]Liability insurance (including pets): €5.81
[*]Capital or term life insurance: €0.00
[*]Pension insurance (including Riester, Rürup, etc.): €0.00 (already deducted from salary by salary conversion)
[*]Disability insurance: €0.00
[*]Accident insurance: €0.00
[*]Household contents insurance: €9.45
[*]Legal protection insurance: €17.09
[*]Other insurance (such as travel insurance, death benefit insurance): €1.42


Living expenses:


[*]Groceries: €600.00
[*]Restaurant costs
[*]Care/drugstore: €136.00
[*]Pets (food, vet, medication, stable costs): €20.00
[*]Medicines/health costs: €130.00
[*]Clothing: €200.00
[*]Furniture: €185.00
[*]Daycare/school fees (and meal money)
[*]Tutoring
[*]School supplies and books
[*]Club fees/gym: €95.00
[*]Babysitter
[*]Toys
[*]Cleaning
[*]TV/video/audio/CDs/DVDs: €24.25
[*]Tickets (football, cinema, concerts, etc.): €25.00
[*]Donations
[*]Other: €25.00


Savings contributions:


[*]Vacation: €333.33
[*]House
[*]Retirement provision
[*]Hobbies/gifts: €40.00
[*]Other: €30.00



Other expenses:


[*]Maintenance payments? No
[*]Loans? No
[*]Other? No
[*]Was something forgotten? Then please indicate here at the latest!


Income and expense totals:


[*]Total income: €6,650 (excluding special payments)
[*]Total expenses: €3,800
[*]Balance: €2,850
[*]Of which sum cold rent and dispensable savings contributions (e.g., savings rate for house): €1,050.00


The expenses were average values from 2017/2018, when we both still had to commute more (with different employers) and other expenses were also higher than today (e.g., due to more frequent business trips).

General information about the property:


[*]How large is the plot?: 787 m²
[*]What are the dimensions?
[*]How high is the standard land value?: 31.12.2017: €205/m² 31.12.2018: €250/m²
[*]New building, old building (year built), house type?: Existing property, built in 1960, standard house of the Niedersächsische Heimstättengesellschaft
[*]Garages? Yes, for 1 car
[*]How large is the house? (living area / usable area):
[LIST]
[*]Living room 34 m²
[*]Kitchen 8 m²
[*]Hallways + entrance area 20 m²
[*]WC + bathroom + shower 14 m²
[*]Conservatory 21 m²
[*]Bedroom 18 m²
[*]Study 15 m²
[*]Basement 55 m²


[*]What is the market value of the land and house after completion?

Construction or purchase costs:

[*
Purchase costs (land + house): €435,000
[*]Additional acquisition costs
[LIST]
[*]Notary/land registry €8,700
[*]Land transfer tax: €21,750
[*]Broker: €0 (sale without broker)


[*]Construction or purchase costs (including architect, structural engineer): €0
[*]Renovation and/or refurbishment costs: €0 (no urgent need that must be covered by credit, capital buffer to be planned)
[*]Ancillary building costs (e.g., house connections, soil expert, construction power, etc.): €0
[*]Outdoor facilities/terrace, paths, garden design, fences, etc.: €0
[*]Financing costs (e.g., fees or commitment interest): €0
[*]Total costs: €465,450

Other costs:

[*]Kitchen costs: €0 (available in the property)
[*]Furniture, lamps, decoration: €0 (already available)
[*]Other "non-acquisition, acquisition ancillary, construction or ancillary construction costs"

Cost summary:

[*]Total costs: €465,450
[*]Deductible equity: €117,450 (= 80% financing)
[*]Financing amount: €348,000

Loan details:

[*]Loan amount: €348,000
[*]Type of loan: annuity loan
[*]Interest rate: 1.74% / 1.78% effective
[*]Fixed interest period: 20 years
[*]Outstanding balance at the end of the fixed interest period: €0.00
[*]Fictitious total term until full repayment: 20 years
[*]Initial repayment rate: 4.19%
[*]Monthly installment: €1,719.70
[*]Special repayments possible? Monthly, up to a total of €34,800 (10%) per year
[*]Repayment rate change possible? 2 times during the term
[*]Commitment-free period: 6 months, then 2.5%

Despite the good financial situation, we struggled. The goal was full repayment in 20 years, not to use up all the equity, and for it to work with only one salary. But even the mortgage broker believed that we would be debt-free after 15 years.

However, we deliberately accepted some limitations

[*]the house is old and used
[*]the location was worth it to us and the market allows such prices
[*]we have to and want to provide personal work

The property is solid and has been well maintained (except for the last 2 years when it was vacant). Renovations have been carried out (e.g., new roof and windows, bathroom surfaces), but others were missing (electrics, water). The renovations were done so that everything is usable and still holds up well, but it is also not painful to remove something prematurely.

Between handover and moving in, we carried out in 4 months:

[*]the replacement of water and sewage pipes in personal work (except WC at entrance) including partition wall in the kitchen to conceal
[*]exposure and removal of old water and sewage pipes in personal work, afterwards new partition walls including tiles
[*]new distribution board with proper number of fuses + grounding for the house (electrician)
[*]new electrics for basement, kitchen and bathroom in personal work, dismantling unnecessary and dangerous wiring
[*]dismantling of basement sauna, ceiling coverings, "residential" basement finishing (party room) in personal work
[*]basement walls renovated in personal work (removing tiles, grinding off glue, applying roll plaster)
[*]parquet renovation (sanding, new varnish, by a professional company)
[*]garden maintenance in personal work (making usable after several years of neglect)
[*]kitchen dismantling and altered reassembly because the room is smaller than before

Many of the personal works were also necessary because otherwise we would not have gotten a craftsman quickly, but the work was urgently needed before moving in. At the same time, we wanted to keep the double burden of rent + loan repayment as low as possible.

However, we can easily live with

[*]the kitchen being 20 years old (electrical appliances are new) - we want to find out by use what doesn't fit and how our concept will look
[*]the bathroom being tiled 20 years ago; we only installed a new toilet and repainted the original 60s bathtub (here, too, we want to calmly design our bathroom later); the important thing was only that the old pipes are gone
[*]the garden being a weedy stubble field - a mowing robot would get stuck everywhere. Medium term, the drainage needs to be redone as everything is run over anyway. After such work, everything can be nicely redesigned.

Nevertheless, renovation and refurbishment costs of over €16,000 have already arisen. (€3,000 water and sewage pipes, €2,000 injection tool, €2,500 electrician, €2,500 parquet layer and various costs for tools, disposals, electrical materials, other hardware store costs)

One note about DKB: It was noted in another thread that equity must be used first. That was also the case for us, but only the equity stated in the financing application counts. Also, some of our incidental purchase costs were somewhat lower than budgeted. After all of these were paid, the full loan disbursement was immediately possible, and we were able to save about €3,600 in equity.

My question would be: Are others here also somewhat more cautious and require more collateral? We currently still have over €50,000 in reserves for unforeseeable things and for carrying out the many renovation tasks on an existing property. The loan is secured with mutual risk life insurance so that if one party dies the other is free of debt. On the other hand, I learn here and also from colleagues and acquaintances how such things are planned extremely tightly, that basically every slice of bread is counted. (Property sizes out of proportion, on tiny plots in chaotic new housing estates, 5-10 years fixed interest with low repayment and huge residual debt).

Edit: Is there actually interest here in some kind of documentation "Renovation/Refurbishment of an Existing Property?"

That was also the case with us, but only the equity specified in the financing application counts.

Yes, of course. One must distinguish between equity and liquid assets. The former is part of a financing, the latter is your money, which you can spend on whatever you want.

Edit: Is there actually any interest here in some kind of documentation "Conversion/Renovation of Existing Property?"

Absolutely

Hi,

wonderful, reads great. Hats off.

only "lags" a bit compared to many other inquiries here in the forum. That would be:

* you have a very good income, a very good savings rate, and good equity saved up
* you chose a property that is not too expensive and fits you wonderfully. Almost too cheap (please don’t misunderstand, I personally think it’s great).
* what impresses me the most is that you chose a very high repayment

From me a 1 with *********

And if everyone did it like him, no one with an average income could finance a house anymore.

It is certainly true that some are cutting off their air to breathe. But there is also the other case of the overly cautious person who wants everything 110% secured. There are basically different risk types. One should just be aware of which kind they belong to and act accordingly.

I basically find it difficult to judge that for others. If I had posted our situation here in the forum and asked whether we could afford to build the house, most people would probably have advised against it. Yes, there isn’t much leeway, but even though we have calculated everything about a hundred times, we repeatedly came to the conclusion that we will manage it. You can’t really protect yourself against truly major misfortunes (of different kinds), and often no amount of money helps. So the risk ultimately always remains.

Your starting position was really very rosy. High income, a lot of equity. For you, it didn’t initially fail financially, but due to external factors and your own criteria not to buy anything too expensive. That’s great. The path may have been rocky, but did you really doubt finding something suitable?
How many users are there here who earn far less and want to build in Stuttgart or Munich...

Edit: Is there actually interest here in a kind of documentation "Conversion/Renovation of an existing property?"

Yes, . Very gladly also as detailed as from you.

My question would be: Are others here also a bit more cautious and want more security? We currently still have over €50,000 in reserves for unforeseen things and to take care of the many renovation tasks on a used property. The loan is secured with mutual risk life insurance.

Many certainly have risk life insurance, especially those who also have children. Otherwise, I consider it a luxury expense. Personally, I (of course) do not have €50,000 in reserve. Much less, in fact, and basically only because I don’t yet know how expensive the renovation will be. Cost estimates and offers sometimes differ greatly. I only plan with two "unforeseen things": a new gas heating system because it’s only 10 years old, and suddenly a new car. What else could happen that’s so insanely expensive and that no insurance covers? Even the car would still be covered by comprehensive insurance. Otherwise, I don’t see any liquidity bottleneck in everyday life. Hopefully no one buys a house and then suddenly can no longer afford a new washing machine. But whatever, if necessary a consumer loan with a slim 0.0%, as the ads suggest.