Financial planning 3 years before building the house

Hello everyone,

we (married couple, 28 years old) are planning to build a house in about three years. So far, we haven’t saved much, but we regularly pay into a home savings contract to at least benefit from the government subsidies.
Our combined net income currently amounts to about €2600.
My question now is what we can already do to be as well prepared as possible for building the house. At the moment, we save surplus money in a daily allowance account.
Does it make sense to already conclude a Wohnriester contract now to benefit from government subsidies and tax advantages (preferably still in 2011)?
Or is it enough to deal with it when the time comes?
Or should one generally stay away from Wohnriester?

Thank you very much and kind regards,
Kiri

Hello Kiri, what I can advise you, if you have a plot of land in sight, I would buy it and start paying it off, but without rushing anything. The savings account is already a very good start. We are also building and had paid off the plot of land at the start of construction, that is a huge amount of interest and loan term that you can save. Wohnriester is not bad, but you are bound to the 23-year term and not very flexible with the repayment, special repayments are only possible to a very limited extent. The interest rates at the moment are also not much lower than a normal construction loan. We agreed on 3.5%. You have to know how expensive the house will be and compare both options, for us Wohnriester was not worth it. Regards Harry23

Wohnriester is out for me because it takes away flexibility (financing, selling, adapting to other circumstances...), causes additional (not yet exactly foreseeable) costs in old age, and the laws will certainly change again over the next 20 years.

How much have you saved up? I also wanted to buy in 3-6 years at first, but now we have decided otherwise. The current interest rates make it attractive.

I would also not rely on Wohnriester. Better to keep saving and build up as much equity as possible until it starts in 3 years.

Hello Kiri,
without meaning to offend you, I have to say that you are aiming for something big.

Facts - correct me if I am wrong - :
- little to no equity
- JOINT net income 2600 euros

Questions:
- do you receive financial support, money / land from parents or similar?
- how much can you save in 3 years? (how do you live, rent-free or similar?)

In 3 years you will be in your early 30s, how does starting a family look, how much money / income will then be lost?

To be honest - for me the project "house construction" would be too risky under these conditions.

Hilaria

Hello,

I have to partially agree with Hilaria.
I do not know your life situation and do not want to presume to judge your financial situation. But maybe two reference figures will help you to make an assessment for yourselves.

House costs (excluding basement and land): min. €1,000 / m2
That is really basic, without floor coverings etc., and with standard components.

In addition, you always have to calculate house connection costs, outdoor facilities, and special requests.....another €30,000.

Loan: for a 30-year term, calculate a flat rate of €50 per €10,000 loan amount.

Example:
Land €80,000
House 120 m2 = €120,000
+ €30,000 other
= €230,000 capital requirement (minimum)

With full financing €1,150 loan installment
With €30,000 equity, €1,000

Then there are the additional costs of a house, which are higher than for an apartment.

As I said, all very simplified and without claim to completeness.
Still hope I could help.

Regards
Mash