Financial planning for house construction - feedback desired

Hello everyone,

my wife and I are considering building a house sooner or later (depending on when the right plot of land is found).
Our current financial situation is as follows:
my net income: 4400
wife's net income: 1500
The net salary is based on 12 monthly salaries, although we also receive Christmas and vacation bonuses, which I do not include here. Since we both work under collective agreements, the salary increases each year by the factor of the collective bargaining agreements.
current fixed costs: ~2300 including cold rent of 650€ and savings plans Riester, building savings contract, funds of about 500 plus car leasing.
variable costs vary quite a bit from month to month since we don’t watch every euro and have lived well so far, enjoying vacations.
current equity is about 65k€.

What do you think in what size range we can finance a building project and manage it well later?

PS: We don’t have a child yet, but one is planned in the next few years, with my wife returning to work after one year.

Hello,

give us a bit more information.

Are the 500 euros the monthly savings rate in funds or for funds, insurance, Riester, etc.?

How high is your car leasing? If I understood correctly, is this included in the 2,300?

Are there any other expenses?

What approximate amount can be assumed for living costs (food, clothing, shopping, cinema, restaurant, etc.)? We could estimate a flat rate of 1,000 here - and you can then say whether that is much too much or too little.

How old are you? For a 40-year-old, a 30-year financing may not be necessary. For a 25-year-old, the term could be extended if needed.

The 500€ goes into a Riester pension, a disability insurance, a self-funded mutual fund savings plan and a small building savings contract. The car lease is just under 500 per month through the employer's company lease and lasts one year and is part of the 2300. With the 1000 living expenses we usually manage well. Of course, there are occasional outliers for special purchases but usually 1000 is more than enough. We are 33(m) and 28(f)

Hello,

I think you can plan relatively "carefree." However, it also depends a bit on your expectations.

Income: 4,400 + 1,500 = 5,900 (without Christmas and vacation pay)
Costs (according to your information): 1,650 fixed (excluding cold rent) + 1,000 variable = 2,650

Surplus: 3,250 euros per month.
However, I want to point out one thing: a monthly surplus of 3,250 euros = 39,000 per year. Under these circumstances, you would have actually only saved for 2 years to build your current equity. It is hard to restrict a lifestyle once you are used to it.
Therefore, I recommend you start keeping a household budget book immediately. Here you really enter ALL expenses and balance at the end of the month. This has the effect that you can see where the money is going, calculate better, and possibly deliberately limit expenses without it hurting.

Back to the text: 3,250 euros per month surplus.

If you plan generously for financing 2,500 euros p.m., there remain 750 euros p.m. as a buffer + possibly payments into the investment savings plan, which could be stopped if needed. In my opinion, this should be enough to bridge the dry spell of parental leave.
The home savings contract could possibly be used for a kitchen or directly saved as a future repair reserve.

2,500 euros p.m. = 30,000 euros p.a.
With an annuity (interest + repayment) of 6 %, you could finance 500,000 euros with this. You would then be done in about 23 - 25 years (so before retirement).
Adding your previous equity of 65,000 euros, you could build for 565,000 euros including land and ancillary costs – if you really need and want it that expensive/large.

Unfortunately, you did not write anything about your wishes and ideas (which monthly rate you imagined, how and what you want to build, how quickly you want to finish, etc.). Therefore, only a general answer can be given.

Thank you very much for the detailed analysis. We are still at the very beginning of our building plans and I would like to hear an initial rough, independent opinion. The reason why the equity ratio is relatively low compared to the income is due to our previous expenses, especially for vacations, for which we have certainly spent 30k€ in the last 3 years. But we wanted to see a lot of the world while we are young and treated ourselves to a lot, which we can gladly do without to this extent in favor of a house in the future. We also just got married last year and spent a lot of money on the wedding.

As mentioned, we are still at the beginning of our construction plans; first, the ideal plot must be found, which is not so easy since we prefer not to build in one of the new development areas with plots of 400-550sqm, where, in our opinion, everything is built too close together. However, as we are increasingly considering building, we will now "park" a larger monthly amount to increase the equity.