Evaluation of Construction Project / Credit Offer

don’t assume anything at all and our income at the time corresponded to the financing. That since the financing the income has increased again we could 1 reschedule 2 increase the installment and abolish special repayments

Nothing was planned and the financing was not based on any assumptions.

And who gives the OP the guarantee that he remains a manager and that the income increases? I have a corporate history and know that you have to fight for every increase if it hasn’t been negotiated immediately.

No boss comes by and says "Hey Meyer, now you get €1500 more per month"

You’re not serious, are you?

Who gives me a guarantee that I remain a manager and my income increases? Of course no one, but if we discuss on this level now, then we can simply summarize it like this:

No one should take out a loan (exception civil servants – but wait, who guarantees that the German state remains sovereign? – so really better no one), because there is no guarantee for anyone that they remain a manager and their income rises. So we first assume that everyone can be downgraded to a clerk with €1,500 net per month (Germany is well known to be very employer-friendly and anyone can be arbitrarily downgraded and fired).

So in future everyone will fully save the capital as equity and then (thus the majority of the population at 50/60 years old) will build a house. But that won’t work either, the banks will not lend their money, a macroeconomic problem will arise. The craftsmen will become unemployed because at the beginning hardly anyone can build anymore, thus even fewer craftsmen will be trained than already.

When we finally have saved the equity to build, there will be only a handful of craftsmen left, who by then will have raised prices so much due to their monopoly position that my equity won’t be enough. But no problem, we’ll just save until we’re 80, at that age it will also be easy to contribute own work.

The retirement age will by then be 80 anyway, so it fits, the own home just in time for retirement.

How could you even finance a car? The house isn’t even paid off, who guarantees you keep your job?

Paying off a house is stupid, but financing a car, an absolute consumer good with high depreciation, makes sense. Hopefully with full coverage insurance, otherwise it will end badly for the poor guy.

The guy is simply the biggest blabbermouth in many forums...

I know enough people like you , who previously took many great vacations for a lot of money. Thus little equity and then decided to build. They managed it and traveled less or much cheaper.... But no, here many believe you don’t change your priorities. Over time, priorities change for many, regardless of whether they build or not.

HelpHelp, another troll in the worldwideweb. You both have good incomes at a young age. If possible, plan 10% extra in addition to the buffer. You wouldn't be the first to prefer newer and nicer models.

I hope you’re not serious now, are you?

Who gives me a guarantee that I will remain a manager and my income will increase? Of course no one, but if we discuss at this altitude now, we can simply summarize it together:

No one should take out a loan (exception: civil servants – but wait, who guarantees here that the German state remains sovereign? – so really better no one), since no one has a guarantee that they will remain a manager and their income will increase. So we first assume that everyone can be downgraded to a clerk earning €1,500 net per month (Germany is famously very employer-friendly in this regard and anyone can be downgraded and fired at will).

So in the future everyone will save the capital fully as equity and then build a house (thus the majority of the population at age 50/60). But that will not work either, the banks won’t get rid of their money, an economic problem will arise. The craftsmen will be unemployed because initially almost no one can build anymore, so even fewer craftsmen will be trained than already now.

When we finally have the equity together to build, there will only be a handful of craftsmen left; by then they will have raised prices so much due to their monopoly position that my equity won’t be enough. But no problem, we simply save until we are 80; at that age it will also be easy for us to contribute our own labor.

By then, the retirement age will anyway be 80, so it fits perfectly: the home just in time for retirement.

How did you even manage to finance a car? The house isn’t even paid off yet, who guarantees you that you’ll keep your job?

You just don’t understand.

At the moment, your income is representable. That is first of all the bank’s perspective. They don’t check whether we still have a “comfort factor” afterwards, meaning whether you can still afford restaurant visits or vacations. They simply calculate lump sums for living expenses and see if, according to the bank’s calculation, you have enough left over.

It also doesn’t interest a bank whether you will have one, two, three, or no children. The actual situation is examined.

Your problem will be the unknown. What will life cost us including children afterwards? What does the income side look like?

Yes, everyone has that risk, but it can be evaluated. If it’s already tight now and you restrict yourself, you’re enslaving yourself.

You can, but you don’t have to.

Well, now, detached from the discussion about the sense/nonsense of some posts, the general tone (including me) seems to be that it all appears to be pretty much sewn up by a button.

€2055/month in burden less €140 maintenance reserve results in €1915/month.
With €5200/month that is just under 37%. I find that anything but exaggerated. I consciously leave out bonuses etc. because I now know how it goes: new garden furniture, awning, garden house, vacation, Christmas, etc. all need to be paid for as well.

But in my opinion, there are 3 other points where it slips up here:

1. On one hand, the OP here gives the impression of the prime example of consumptive greediness, listing the wine cellar next to the grill hut, the 2 fat cars and many very expensive vacations, only to add that in the future one will no longer need all that and wants to simplify life anyway. If you really manage that so easily, you have my respect. I do not want to imply anything, but it is very hard for me to believe that one would - precisely in one of the most stressful phases of one’s life (building a house) - turn one’s life upside down and give up many things which one had before and probably liked.

2. On the other hand, €1500 installments with a financing volume of €500,000 correspond to an annuity of just 3.6%. With 1.15% for 15 years, you then still have a residual debt of about €300,000.
That would be too risky for me personally, but that is a matter of taste. And when I read the OP’s posts, he seems to be more risk-friendly, after all he already plans internally with an inheritance ...
If the interest rates for the follow-up financing rise by 2% after 15 years (3.15% for the second 15 years fixed interest period), the rate would already have to be raised to about €2100 in order to be done with it after a total of 30 years.
Again, I do not want to imply anything, but I am not sure if the OP is aware of this.

3. Regarding the stated house costs, there have been repeated hints that it will not work out financially and one is heading towards a financial bottleneck.
On one hand, because the construction costs are already considered relatively low, on the other hand because there is hardly any buffer for nice things.
And here the circle closes:
A building client who lives the above-mentioned lifestyle will also want to upgrade when building and reluctantly give up things. That is understandable, many - including us - felt that way. But you should counteract it if you still can.

I would simply recommend you to actually live the plan from now on. You yourself said so nicely that the best plan is only as good as its execution.

Furthermore, I would still have offered to see what the same houses cost according to the Energy Saving Ordinance. So no KFW40+ or KFW40 and especially no KFW55. The jump is not from 55 to 40(+) but from Energy Saving Ordinance to 55. I would be very surprised if overall the KFW40+ house makes so much sense financially that it is a clear decision.

As an example: We have about 190m², built according to Energy Saving Ordinance in 2017. Central controlled residential ventilation with heat recovery, heated with gas condensing boiler without solar.
Last year we used about 15,000 kWh gas at room temperatures of about 22.5°. That is - including hot water - about €900/year for heating.
What else can one really save there? That's €75/month ...

Also, the topic of building smaller I would reconsider, a good 170m² is better than some houses with 180 or 190 where some dead spaces arise because the floor plan is as it is.

I do not want to wish you (and probably most of the others here) anything bad. However, I do somewhat wonder what you actually want here? It just seems to me as if you have already made the decision for yourselves anyway and just want confirmation that everything is fine ...
Many here who answered you are already a good deal further along in their planning, consequently also in their experience. That would make me think a bit if I were you.

In my eyes, it is much, much better to sleep on this building project with €50,000-70,000 more. Whether that comes about by a smaller house, building according to the Energy Saving Ordinance, or more equity does not matter ...
I consider a combination of all three things advisable.

All the best for your project.

Construction experiences: Our neighbor paid 15k for his earthworks. We, right next door, only 10 meters away in a straight line and on flat terrain, paid 10k more because water collected unfavorably beneath us. Bam! Then my preliminary planning was a dream. I had really planned every damn thing and generously sized it. Then suddenly a planning error came up, the roof had to be changed. We were involved with 3k proportionally. Bam! Then there are smaller decisions on the construction site that no one really expects. Or did you talk about whether you want fibers in the screed? Costs only 300 bucks, but then a decision comes up here and there and suddenly you’re in the additional financing. Many things are discussed personally with the craftsmen when the time comes. The sellers don’t even know this or ignore it. Just take the collective knowledge here seriously and don’t take the "final" house sum at face value.

Regarding the financing: Yes, that can work. But from my own experience, I can confirm that things change financially with children. Especially in the beginning, you want to invest quite a bit in the little bastards. Even with the second one! I wanted to do all sorts of decoration and painting for my daughter, but had to break it up a lot until I could sell some junk to get the money for it. Then a tooth breaks off and has to be replaced expensively (due to lack of dental insurance), the child is often sick and you exceed the sick child benefit, etc. You have to be able to absorb that. And the garden should look presentable too... you can sink so much into that, especially if your wife discovers Pinterest. Keep in mind that your wife might not be able to work part-time because otherwise the money won’t be enough. That’s how it is for us. I would like to work only 20 hours a week but could only reduce to 30 hours. Is that okay for you?