Experiences and opinions on financial planning

Hello everyone,

we have a house in prospect that is in an absolutely dream location for us, in close proximity to our parents. The purchase price is above the price we had actually envisioned for a purchase, but due to the perfect conditions, we are still considering buying.

Do you consider the following financing to be manageable?

General information about you:

[*]How old are you? - F30 and M30 (married)
[*]Are there children? - Two children (1 and 3)
[*]Are more children planned? - no further children planned
[*]What do you do professionally? - F: auditor, M: insurance clerk
[*]How many hours do you work? - F: full-time, M: 28 hours

Income and asset situation:

[*]What income do you have (gross/net)? - 5,500 euros net plus 9,500 euros contractually guaranteed special payments net
[*]How much child benefit do you receive? - 560 euros
[*]How much equity do you have? - 140,000 euros
[*]How much equity do you want to invest in the house project? - 111,000 euros

Expense situation:

Housing costs:

[*]current warm rent incl. electricity, water, sewage,...: - 1,100 euros
[*]telephone, internet, mobile phone: 50 euros
[*]streaming: 50 euros

Mobility costs:

[*]Situation: 1 car (not dependent)
[*]Insurance: 43 euros
[*]Taxes: 2.50 euros
[*]Fuel: 30 euros
[*]Repairs + savings rate: 85 euros

Insurance costs:

[*]Liability insurance: 7.55 euros
[*]Disability insurance: 120 euros
[*]Accident insurance: 5 euros
[*]Travel health insurance and trip cancellation: 8.50 euros
[*]Legal protection: 8 euros
[*]Sick pay insurance: 12 euros
[*]Household contents: 22 euros
[*]Future term life insurance: 30 euros
[*]Future building insurance: 50 euros

Living expenses:

[*]Food and drugstore for adults: 600 euros
[*]Cats (food, routine vet, cat litter, reserve): 150 euros
[*]Daycare/school fees (and meal money): 250 euros
[*]Planned flat rates for children (food, drugstore, clothes, toys, leisure): 1,000 euros

Savings contributions:

[*]Vacation: 375 euros
[*]Retirement provision: 100 euros
[*]Savings in general: 250 euros
[*]House maintenance: 275 euros
[*]Children: 100 euros

Income and expenditure totals:

[*]Total income: 6,700 euros (regular inflation adjustment is given) including monthly calculated special payments (contractually guaranteed)
[*]Planned loan installment: 2,350 euros (3.58% nominal interest rate, 15 years)
[*]Calculated additional costs: 550 euros (water, gas, electricity, property tax, sewage, waste, street cleaning, wastewater)
[*]Balance: approx. 500 euros (leisure for adults, clothes, possibly unplanned children's expenses)

General information about the property:

[*]How large is the plot? - 196 sqm
[*]What is the standard land value? 770 €/m2
[*]New build, old building (year built), type of house? - semi-detached house, 30 years old
[*]Garage(s)? - one
[*]How large is the house? about 150 sqm living space

Construction or purchase costs:

[*]Property transfer tax and notary fees - 51,000 euros
[*]Purchase costs: 600,000 euros

Cost summary:

[*]Total costs: 651,000 euros
[*]Deductible equity: 111,000 euros
[*]Financing amount: 540,000 euros

Thank you very much for your assessment!

Morning,

it can be done, after 15 years without significant extra repayments there is still an outstanding debt of 280,000 to 300,000 euros, which one should simply be aware of. In addition, a burden share of about 42.73% is slightly above the generally recommended upper limit of 30-40%, without considering the special payment of 9500 euros.

Morning, you can do it, but after 15 years without major special repayments there is still a remaining debt of 280,000 to 300,000 euros, which one should simply be aware of. In addition, a burden share of about 42.73% is somewhat above the generally recommended upper limit of 30-40%, not taking into account the special payment of 9,500 euros.

I agree with the "you can do it," but as a banker I of course also factor in a contractually secured bonus payment. I do not just calculate with 10 months' salary or similar for safety either. This makes the rate about 1/3 of the household income, which is healthy. However, the remaining debt after 15 years (if you do not repay the first year) is then almost 400k.

Have modernizations already been carried out in the house (e.g. heating, bathrooms, kitchen)? Otherwise, you should still plan for that in the short or medium term.

Have modernizations already been carried out in the house (e.g. heating, bathrooms, kitchen)? Otherwise, you would have to plan for that in the short or medium term.

Equity for a new kitchen is already planned and reserved outside of the aforementioned amounts. The heating system is about 8 years old and realistically, according to the building expert, still has a lifespan of a good 10 years. Otherwise, the windows will become an issue in the next 10 - 15 years. With an (assured) donation as well as the maintenance reserve, we would have around 45,000 Euros saved up for these works in 10 years.

The bathrooms are in good condition; the idea would be to tackle them after the windows and heating once the corresponding capital has been built up again. However, we would renew the grouting once upon moving in.

Do you consider the remaining debt a problem in light of the risk of follow-up financing, or is it "only" about the fact that a lot of interest is paid during the 15 years fixed interest period?

The whole thing is calculated so that we are done by retirement, also taking into account possibly rising interest rates. In case of doubt, we would increase the rate accordingly, as we hopefully could both work full-time again in 15 years. Special repayments through inheritances are also likely, but we do not want to plan too heavily on that / base the financing on it.

Purely mathematically, the project makes less sense – real alternatives are unfortunately not available due to the tight rental market in our region, especially not with the given conditions. In addition, cold rents for houses here are realistically between 1800 and 2100 euros. Unfortunately, that does not make the decision easier, as ownership is of course associated with corresponding risks.