Feedback on financing requested (purchase price 222,000)

Person A: mid-30s, 3200 euros net, married (to Person B), no children
Person B: early 30s, 1200 net (still in probationary period), married (to Person A), no children
available equity: 35,000 euros

Background: Person B has only been in Germany for 1 year, this is the first job here in the country. Other savings and costs have been used for modernization or repair of the existing property or for living quite well.

Planned is the purchase of a newly built terraced house for 222,000 euros. The price includes incidental purchase costs (NRW, before the increase to 6.5%) and turnkey with 2 parking spaces.
The following still has to be done afterwards: flooring, kitchen, walls and small details
The living area is 140 m² divided over 3 levels plus attic. The bathrooms are already fully finished, tiled and everything installed. The same applies to the guest toilet and entrance area.

Additionally, we own another condominium, which is rented out. The rental income fully covers the loan amount here. Rental is secured, no vacancy is expected (there is demand if the current tenant moves out).

rough financial plan:
Income:
3200 net Person A
700 net Person B (I deduct 500 due to "risk" because of probationary period)
500 cold rent income
= 4,400 euros net / month

Costs:
- 450 loan for condominium
- 250 private reserves for condominium
- 700 current rent all inclusive (will be eliminated when moving into the house)
- 200 for internet, mobile phone, pay TV, GEZ, other small expenses
- 100 private insurances
- 100 vehicle tax / insurances
- 300 fuel / train ticket / travel expenses
= 2,100 euros costs / month

All cost values are generously set with a buffer.

So after deducting the equity, we need about 187,000 euros in credit. The bank is cooperative, offering various models; including with KfW support since it is a KfW 70 house. Interest rate is 1.5%-1.9% depending on the model and term; KfW share was given at 1.25%.

My calculation at the time of moving (would be approx. 09/2015):
4,400 income (see above)
+ 500 salary Person B (since probation is over and can be planned)
+ 700 rent (that no longer has to be paid)
- 2,100 euros costs (see above)
- 1,100 loan (set high, maybe we will start financing with 800 / month)
- 400 house additional costs (including insurance, water, common costs, heating, electricity, ...)
- 600 food and normal household expenses
= + 1,400 euros "leftover" at the end of the month

Am I fooling myself, ignoring missing points or underestimating something? I want to approach this very realistically and therefore appreciate honest feedback.

1. Planning to have children? That changes the income situation significantly. At least for a while.

2. Make sure to find out exactly what is included in "turnkey" and especially what you still have to do yourselves. Besides the mentioned items, there is surely still a lot to do in the exterior/garden area. Often, for example, the house does not yet have a staircase in front of the front door, etc. Also, you probably still have sample selection requests. And after the move, new furniture or something like that will be needed here and there. But even the costs for the mentioned items (floor, walls, kitchen) are completely missing from the calculation. So your loan requirement is significantly higher.

3. Determine your expenses very precisely. For example, by keeping a household budget. We pay as much as possible by card so that we can categorize all expenses via our online banking program. This way, one-time expenses can also be averaged very well over the year. I myself was surprised how much cost the small, trivial amounts or the "you only buy that once" expenses generate.

Just going by feeling, I would say that it should be quite doable with that income. But you yourself should probably look at it more closely.

Did I misunderstand something, or why are you adding +700 euros in your calculation because of the dropped rent? Shouldn't it be 0 there?

I thought so just now...

Regarding the question of whether you are deceiving yourself. How much is currently left monthly.

If the answer is 0, almost 0, then the clear answer is: yes.

Good evening,

The purchase of a newly built terraced house is planned for 222,000 euros. The price includes ancillary purchase costs (NRW, before the increase to 6.5%) and is turnkey with 2 parking spaces.

How is the 222 thousand divided? How much is attributed to the land, how much to the terraced house? Where is this terraced house supposed to be located?

Rhenish regards

Person A: mid-30s, 3200 euros net, married (to Person B), no children Person B: early 30s, 1200 net (still in probation period), married (to Person A), no children existing equity: 33,000 euros

Background: Person B has only been in Germany for 1 year, this is the first job here in the country. Other savings and costs have been spent on modernizing or repairing the existing property or have been used for a rather comfortable lifestyle.

The plan is to purchase a newly built terraced house for 222,000 euros. The price includes additional purchase costs (NRW, before the increase to 6.5%) and is turnkey with 2 parking spaces. The following still needs to be done afterward: floor coverings, kitchen, walls and small details The living area is 140 m² divided over 3 levels plus attic. The bathrooms are already completely finished, tiled and everything installed. The same applies for the guest toilet and entrance area.

Additionally, we own another condominium, which is rented out. Here the rental income completely covers the loan amount. Renting out is secured, no vacancy is expected (there is demand if the current tenant moves out).

rough financial plan: Income: 3200 net Person A 700 net Person B (I deduct 500 due to "risk" because of probation period) 500 cold rent income = 4,400 euros net / month

Costs: - 450 loan for condominium - 250 private reserves for condominium - 700 current rent all inclusive (will no longer apply when moving into the house) - 200 for internet, mobile, pay TV, other small expenses - 100 private insurances - 800 vehicle tax / insurance - 300 fuel / train ticket / travel expenses = 2800 euros costs / month

All values for costs are generously budgeted with a buffer.

So after deducting the equity, we need about 190,000 euros in credit. The bank is cooperating, offering various models; including KFW support as it is a KFW 70 house. Interest rate is 1.5%-1.9% depending on the model and term; KFW portion was quoted at 1.25%.

My calculation at the time of moving (would be about 09/2015): 4400 income (see above) + 500 salary Person B (since probation period has ended and can be planned) + 700 rent (which no longer needs to be paid) - 2800 euros costs (see above) - 1100 loan (set high, possibly we will start financing with 800 / month) - 400 additional house costs (including insurance, water, general costs, heating, electricity, ...) - 600 groceries or normal household money = + 700 euros "leftover" at the end of the month

Am I fooling myself, lying to myself by missing points or underestimating something? I want to approach the whole thing realistically, so I also wish for honest feedback.

At first glance, it doesn't look bad. I find the living expenses a bit underestimated – but well, you have to know what you need yourselves (you should consider the tip with the household budget book, even if it’s annoying). I find it very strange that you do not consider the 500 euros (which is good) from your wife's probation period in the income, but include it in the calculation for the move. You don’t even know if she will actually be hired then – if yes, then you can leave it in above. Strictly speaking, you should not consider your wife’s income at all as long as she has not successfully completed her probation period – unless you are fairly certain she will be kept on. Also, you have fully included the rental income from the cold rent. Doesn’t that have to be taxed as well?

Your equity will be significantly depleted upfront. With this amount, you can possibly cover the ancillary costs + floors and kitchen. So in my opinion, you have to assume 100% financing. Thus, the 1,100 p.m. also fits.

So long for now.