Evaluation of construction financing offer with little equity capital

Thank you all for the feedback. Since I have been reading this forum for some time, I was sure I would receive critical feedback. But I did not expect it to be so disastrous!

We would still appreciate it if a few more people could comment on the financing structure/concept. Apart from what you think about the too high total volume, what else should be considered or taken into account?

We would still be happy if a few more people could comment on the financing structure/-concept.

The concept is fine, although for the 10-year-olds I would waive interest rate protection due to the low remaining debt. However, I would build a bit smaller. Then it should also be no problem for kids.

Thank you all very much for the feedback. Since I have been reading along in this forum for some time, I was sure I would receive critical feedback. But I did not expect it to be so disastrous!

We would still be happy if a few people could comment on the financing structure/concept. Apart from what you think is an excessively high total volume, what else should be considered or taken into account?

I would advise you to reflect again and create a timeline with income and expenses. Besides the initial €1,700, you have incidental costs, need to set up provisions, and secure your workforce that will come your way. We are talking about €2,500 per month disappearing. If there are children, that means part-time work and/or costs related to childcare, a bigger car, more expensive vacations. Child benefits are just a nice extra. Your income is very good, no question. But the project does not fit.

Thank you all for the feedback. Since I have been reading along in this forum for some time, I was sure I would receive some critical feedback. But I did not expect it to be so disastrous!

We would still be happy if a few people could comment on the financing structure/concept. Apart from what you think is too high a total volume, what else should be considered or taken into account?

Unfortunately, this is observed here quite frequently!

My recommendation: go to your bank advisors, get advice, talk to each other again, also about possible risks, and then just do it! Don’t let yourself be unsettled and follow your own path!

In this spirit: a healthy 2020!

Thank you all for the feedback. Since I have been reading along in this forum for some time, I was sure I would get some critical feedback. But I wouldn’t have thought it would be so disastrous!

Oh come on, I didn’t find the feedback that disastrous at all.

and then just do it!

I agree. The costs are indeed very high, but the odd numbers down to the last euro make me feel like you have very concrete and reliable figures. Better to estimate high right away than all these tight budgets where a felt €100,000 is missing. Two civil servants, so some things in the future are quite secure. Plus the child bonus in addition to the child benefit. Have you already answered the questions about daycare fees? But even that time you should be able to manage. I don’t particularly like the home savings contracts. Ask the bank if instead of the home savings contracts, classic loans directly from the bank are possible. Maybe the overall costs would be lower. You would have to calculate that carefully with a pencil. Whatever, just do it.

Thank you all again

If I were you, I would reflect once more and set up a timeline with income and expenses. Apart from the initial €1,700, you have additional costs, provisions, securing your earning capacity that are coming your way. We are talking about around €2,500 per month going out. If there are children, that means part-time work and/or costs related to childcare, a bigger car, more expensive vacations. The child benefit is just a nice extra. Your income is very good, no question. But the project doesn’t fit.

That is exactly what we have already done. As two civil servants, the future income can already be calculated quite well. You roughly know when promotions will happen and how salary will develop due to collective bargaining agreements or experience levels. I have calculated this all the way until we retire. That’s how I arrived at the proportional costs as a percentage of our total income, which I mentioned in the initial post.

Two civil servants, some things in the future are quite certain. Plus the child supplement in addition to child benefit. Have you already answered the questions about daycare fees? But even that time you should be able to manage.

I don’t particularly like the building savings contracts. Ask the bank whether instead of the building savings contracts, it would be possible to take classic loans directly from the bank. Maybe the total costs would be lower. You’d have to calculate with a fine-toothed comb.

Regarding the daycare fees: I haven’t fully researched that yet. In Rhineland-Palatinate, however, it seems that from 01.07.2020 no fees are charged for children from 2 years old.

Regarding the building savings contracts: do you mean then also to leave the KfW loans/subsidies aside and finance the €200,000 directly through a Volksbank product? The Volksbank itself currently only offers 2.15% over 30 years. I don’t really like it either, but so far it seems to be the only option to have it secured at least mostly over the entire duration.
We still have several appointments at other banks in early January, let’s see what offers we get there.

The concept is okay, although for the €130k after 10 years, I would waive interest rate locking due to the low residual debt.
However, I would build somewhat smaller. Then kids shouldn’t be a problem either.

So you would leave the approx. €130k completely unsecured after 10 years and hope that the interest rates will still be at a similarly good level as now in 10 years?

If we then didn’t pay into the building savings contract accordingly, we would start with a monthly rate of only €1,450, which would certainly relieve us. But then there would also be the risk of possibly having 4% or more in 10 years...