That is basically reasonable as well. We do it so that we set aside a moderate amount monthly into ETFs for the remaining debt. Alternatively, if one is more risk-averse (although we are not big risk people either, we only do global ETFs), you can also just put it into a savings account and make a special repayment once a year. We have an interest rate that is still somewhat below the current rates, so we hope to get a bit more return from the market in the long term, to then pay off a larger amount when the fixed interest period ends.
In general, whether you do it through stocks or other investment options, I am a big fan of supplementing a fixed monthly rate with a second, private and separate monthly saving for this purpose. That way you also have the flexibility to access it if something extraordinary happens. However, you need the discipline not to blow it on a Caribbean vacation. :)
From afar and without pictures, I can't really judge. When I thought of the additional construction costs, I also considered other things besides just the earthworks. Keywords: construction electricity, construction water, insurances, house connections (electricity, water, gas?, telecommunications, multi-utility house entry), possibly construction supervision, possibly energy consultant, surveying costs, site plans, authorities’ fees/applications, possibly architect (depending on whether you build with a general contractor or contract separately), etc...
Also hard to calculate as a lump sum. We built in Lower Saxony, on a flat plot – we spent about 15k on paving work – driveway, carport, access path, house surrounds and a terrace. The rest we initially landscaped ourselves provisionally – lawn and some beds. But depending on the requirements of the plot, that can also become more expensive, depending on what you want.
A kitchen alone quickly ends up costing 20k, depending on how big it should be. Prices have also gone up for everything. What people often forget are washbasins and accessories, that also depends on what is included in the contract and what is not. In some construction companies, you basically get a fully equipped bathroom included, in others you have to get a lot yourself. Furniture (i.e., washbasins) is rarely included.
Regarding the buffer – we had an overall buffer of around 50k in the budget, which we will use flexibly according to priority. Our outdoor facilities are also included in that. If something unexpectedly becomes more expensive during construction, then our outdoor facilities will be more modest or done bit by bit – many neighbors do the same, we are all young people and not rich. ;)
In 2023, there will be a levy for road expansion, the amount of which we do not yet know. That money is initially blocked in my budget (the worst-case assumption). If it’s not that expensive, we will put photovoltaics on the roof or a fancy garage door or something like that instead.
So far we are doing quite well with this plan. The outdoor facilities, which were originally planned to be "luxurious," have shrunk a bit due to a few items becoming unexpectedly more expensive. All in all, we are managing well so far. And you have to sell the buffer this way or something like it, because the bank expects proof of everything with the financing, including your equity expenses. That means if something is left over, we basically have to spend it on photovoltaics, because the bank wants us to spend the agreed amount X. :)
Super, thank you very much for sharing the detailed considerations! It sounds like you have sensibly planned buffers everywhere so that costs can sometimes exceed estimates without causing panic but also without overly restricting you in the overall project. I am also trying to find this healthy balance right now.
Assumptions for kitchen, furniture, outdoor facilities, extended additional construction costs noted :-)