Financial planning for new construction with good income and little equity

35 years term is quite a hefty stretch. Thread starters would be paying off the loan almost until retirement. And with about 4% interest, I would recommend repaying as much as possible anyway. But in the end, everyone has to assess that for themselves.

Huh? When there was 1% interest and 3% repayment, the term was almost identical. And what kind of statement is that, that they would be paying off the financing almost until retirement? Do you have any issues – those are really dumb statements. Increasing the repayment to, for example, 4% (then the term is just under 20 years) raises the installment by a neat €1,000 per month. Which the OP can’t afford. What gets even dumber then is the fact that the house purchase won’t take place and they continue to rent. The dumbest part is that as a renter they won’t even have anything of their own after retirement begins.

So regarding the kitchen, actually all banks say a clear no with reference to the mortgage loan.

No, that’s simply wrong. Basically, all banks allow that. By the way, that’s my job as well.

Besides, you often have to submit proof of use / invoices, so you can’t do whatever you want with it.

With new construction you naturally need proof of use that matches the financing plan. For all other financing applies: Do whatever you want with the money.

And a part of the ancillary costs was also clearly excluded with my bank (ING), at least property transfer tax and notary fees.

That is absolutely representative if you conclude from your own financing – no matter how the financing structure looked – on ALL banks... Sorry, if you have no clue about the financing business, you shouldn’t give advice here.

Ok, just upfront: with this kind of behavior, this is my last response. This is during my free time, I don't have to put up with this.

Huh? When there was 1% interest and 3% repayment, the term was nearly identical.

But that didn’t really matter in that case because hardly any interest was paid. You’re happy to let it run long then. With today's interest rates, I would always recommend finishing earlier. With 2.5% repayment, for example, that would mean more than 10 years less exposure, and yes, the monthly payment would be a few hundred euros more, but from my point of view absolutely worthwhile if manageable.

With new construction, of course you need a proof of use that matches the financing plan. For all other financings the rule is: do with the money whatever you want.

Yes, but here it is about new construction, so you can’t just do whatever you want with the money. “Sorry” I should have just said “construction financing” instead of real estate loan, so you wouldn’t get hung up on that. I thought it was clear enough what was meant in this case.

Ok once in advance: with this behavior, this is my last response. This is in my free time, I don't have to put up with that.

The tone of some people here is really inappropriate at the moment. A factual opinion should be met with a factual opinion.

Yes, but this is about a new build, so you can't just do whatever you want with the money.

However, you can also pay for the kitchen or the Porsche with it if it fits into the financing plan. That's no problem at all and our daily business. It just has to be discussed BEFOREHAND.

Basically, it does not matter whether the financer perceives it as good, bad, feasible, or whatever... What should/can be included - what not...

What is important for the OP to know is that he will get a loan. Conditions or terms can be given and that’s it.

One has to calculate for oneself anyway whether it fits their own life planning.

The financer has no plan whatsoever about what kind of lifestyle is maintained or is to be maintained in the near future. How much the child costs, how one wants to live, and what investments for the house/child or whatever are coming up in the near future – he doesn’t know either.

Only the OP can realistically assess this (without rose-colored glasses of course).

But if he is honest with himself, he will realize that with such a financing volume and his conditions, he is not doing himself any favors (we all certainly see that here even with relatively little input of data).

The change of mind to actually do something active towards ownership honestly only came at the beginning of the year; before that, there were rather other priorities (e.g., long-distance travel). Thus, saving only started recently, and we currently have just about 10,000 EUR in equity. Now, however, we are not considering waiting a few more years to save a significant amount but rather want to jump into the game already because of the Building Energy Act, especially since we received a pretty attractive offer from Town & Country House, in my opinion: - City villa with 150m2, finished except for floor coverings and wallpapers, including an additional shower as a special feature: 318,750 EUR - Plot from them at 52,000 EUR

Strange but serious advice: Go to the next model home park with as many different providers as possible. Enter every model home and ask for their construction service description. Sit down at home. Compare all construction service descriptions, position by position. It is best to create an Excel list, write out every single item, and then check for each provider whether it is included or not. This already gives you a feel for whether something is missing when you cross out your preferred partner. Because often, it is simply not stated! Or luckily hidden in clauses as "provided by builder" / "provided by client..." This, in turn, can significantly affect incidental building costs. Then, also important—others have warned about this before: Additional costs can arise quickly due to really stupid aspects and these can quickly become five-digit sums. Just three examples: 1. In the described constellation, the real estate transfer tax would be applied not only to the plot but to the entire construction project. This quickly adds about 20,000 EUR in additional costs (provided the plot even exists and is suitable for you. Personally, I would never sign a contract without knowing the plot). 2. In some federal states, a photovoltaic system is mandatory. That’s not exactly cheap either. (Sure, it saves costs during operation, but it has to be financed first.) 3. Soil problems can also drive prices up. A soil survey should exist. Considering the stated income and expenses, there should be more equity. Next, painful tip: Save absolutely everything as much as possible for at least 1 year. See how much accumulates. Keep a household budget! Where does money flow out? To me, it seems either the income situation is still relatively "new" or a lifestyle has been maintained so far that could not be sustained under the given circumstances of building a house. And reductions in standard of living are huge stress factors. Please do not underestimate that. After this year, you can then assess offers quite differently with the knowledge gained so far (see first tip). PS: 150m² city villa—which is per se not the cheapest building form to begin with—at the stated price is extremely ambitious, in my opinion. I would examine the offer very thoroughly.