Doubts about whether one's own bill is correct...

Hello everyone,

during a discussion in the circle of friends "we want to build," the question arose whether a house financing would be feasible at all with the following financial standing (no details on costs yet foreseeable), and if so, within what scope:

- two earners, late 30s and mid-40s 'young'
- no children, planning completed :)
- combined net monthly income 2800 EUR plus freelance work (varies)
- equity about 100k
- special repayments foreseeable (inheritances) in < 10 years with at least another 100k

The two are considering building a house with an office, based on an extended freelance and also self-employment approach, possibly (cost advantage!) also in the corresponding commercial area – so at least 4 rooms + guest...

I see the whole thing as "tight but doable" – one job is practically un-terminable (1800 EUR net), the other may fluctuate a bit but could be compensated by an increased freelance activity (resp. expansion into self-employment).

KfW funding is also to be used, and there could be grants from cost bearers regarding accessibility – if that matters somewhat in the financing concept.

What do you think?

Hello,

Freelance work is a "topic" for many banks. Some professional groups are simply or difficult to finance. From the equity structure, it is interesting. However, the approximate costs would need to be known.

If you want to build for 700k and have 100k equity, it doesn't fit. If you only need 150 in loans, then yes :)

It cannot be answered here in a general way with the given information

As HilfeHilfe, we cannot really give you a concrete answer regarding the information provided.

Therefore, first some prompts/questions for consideration:
Your equity is good, no question. Income rather moderate.
Where do you want to build? In Hamburg - will be very expensive. Or rather outside in a rural area? What are the standard land values there?
Even if you don't have a price yet, it would be important to know which direction you want to go? Rather a small bungalow with 100 m² or more like a "villa" with 250 m² (exaggerated ;))?
If the older one of you is in their mid-40s, consider that you only have about 20 years until retirement. Should the whole thing be paid off by then?
What does "The second job fluctuates regarding secure employment" mean? How big is the risk of unemployment? Can the salary really be compensated through freelancing/self-employment or how does the bank see that? (see HilfeHilfe’s answer)
How certain is the inheritance within the next 10 years and also regarding the amount? The relatives could live longer or "blow" the money. ;)
How much can you actually afford monthly without "stripping yourselves bare"? Also think about the higher ongoing costs associated with a house.

Maybe you feel like writing something about this.
Otherwise, it is indeed difficult to give you advice.

You have to know approximately what the house-building project will cost. However, if you consider the condition that it must be repaid within 20 years and that with a 15-year fixed interest rate you currently get about 2% interest, you can calculate a rate of around 500 euros per 100,000€ loan per month. Based on what money is left after living and housing expenses, you can calculate how much credit you can afford. If you now know what the house-building project costs, you can make a statement. However, the banks will make their own statement...

Thank you for your numerous replies: ok, one by one - it is not our project, but I will now project the answers accordingly:

: the freelance work would preferably not even be involved with the bank, since the permanently employed partner acts as the borrower. The problem would only be how the whole thing looks mathematically with "less" income - the low earner would be the tenant...
: the 'where' is a good question - just like we like Hamburg, but also the surroundings (Hamburg is just too expensive) with max. 1h travel time to the city center
The desired size would be about (all in all) 160-180m2 with a granny flat and office.
The security of freelancing is definitely there, only the income fluctuates - sometimes more, sometimes less, but usually the nearly 1000 EUR are secure. Unemployment is hardly a threat.
The inheritance(s) are realistically once 90% within 10 years and once 80% within the mentioned 20 years.
: well, everyone would like to know the price - I have already said that you need numbers to calculate, but without land there are unfortunately no detailed prices...
: for rent so far 800-900 euros planned (cold), for the house about 1300 euros warm could be realized. Luckily, no children or old loans need to be considered...

For the bank, what counts is what is there. So whether the job fluctuates doesn’t matter, as long as it is permanent. Whether inheritances come in, the bank doesn’t care either. So if only the permanently employed partner (not spouse? They would have to co-sign) goes there with their 1800 and wants money, they will definitely get something, but it won’t be much. Under no circumstances will they be approved for a rate of 1300, regardless of whether someone else is paying in the background. Let’s say, with a lot of luck, they might get a 200k loan – rather less, since age is also taken into account. Plus equity, that’s a 300k budget, which could be very, very tight for an average single-family house with 120 sqm – but it probably won’t be enough for 180 sqm with a granny flat and an office.

Have a financial broker (make sure that their fee is not paid by YOU, but by the bank, otherwise they want money even if you ultimately decide to drop the whole thing – that must be stated in their standard information sheet!) calculate this for you. Then you will have numbers you can work with and can decide whether you want to go through with it. Very likely it will come down to something much smaller – or something used. That doesn’t have to be expensive in the Hamburg area (25-30 km) and could be done for under 150k. At least an acquaintance is currently trying to sell her house for that price expectation. Or rather, trying.