Financing a single-family home beyond retirement?

It always depends on where you build, what the background is, and how brave you are. But this "finance everything, small installments, car, house, and kitchen" I personally don't find helpful.

Well, it depends on the perspective. I’m almost in my mid-30s and unfortunately see how cancer spreads among my over-55 colleagues. Yes, many of them have worked hard and often didn’t go on vacation for a long time, and the house is paid off. They just bought a new e-mountain bike and/or camper. The kids are finally out of the house. Now all the crap starts.

Then I tell myself: yes, solid financial planning is necessary. If everything goes as planned, we will be done with financing before retirement. But that is not a yoke we want to burden ourselves with 100%. If we sometimes don’t have money for special repayments or just want to blow it, then we can do that. We are young and healthy now. We both enjoy work, but enjoy leisure, sports, and vacation even more.

Sure, someone might come along now and condemn the consumer and pleasure society, but what really matters in life? In my opinion, not having the house paid off as quickly as possible. Unfortunately, life is much too short for that.

There is no right or wrong. Everyone has to decide for themselves. Whoever still wants to pay off a house at 75, has lived well until then, and leaves something for the kids, bravo, I want to take a different path.

Which repayment amounts are you assuming here?

Let's assume the average house, where €300,000 need to be financed. Since the average family does not have substantial equity, this would mean 1.5% interest (more likely with a fixed rate over 25 years) and 4% repayment. That results in a monthly payment of €1,375. Additionally, there are incidental costs, let's say €400, to also build up some reserves.
Total: €1,775 per month just for the house
Living expenses for a household of 4: €1,700 to €1,900 (including insurance, car, etc. - this is just a rough estimate)

So the family must have at least €3,500 net income available. And this does not account for new purchases, vacations, or the like.
To be comfortable, more income is necessary. Single earners have a hard time with this.

Reduce the repayment to 2%, and the monthly amount decreases by €500. That is a significant difference. And after 25 years, "only" €150,000 of debt remains. But what value will this debt have after 25 years? What will the income look like then? Maybe there will be the option for a special repayment?

I think "there is no right or wrong" fits quite well. Some want to be debt-free by 50, others do not. It all has its pros and cons. The financing should definitely be set up in a way that the borrower feels comfortable and can sleep peacefully at night.

Reduce the repayment to 2%, and that's already €500 less per month. That's a lot of money. And after 25 years, there are "only" €150k of debt left. But what value do these debts have after 25 years?

Exactly that. Our rate is set so that even one earner is enough not to let the financing fail immediately and still be able to live "well"/OK. However, we need >40 years for that in the plan. My bonus is that my wife is 6 years younger and will have to support me then. I would never have thought of making the financing dependent on my retirement.

There is no right or wrong. Everyone has to decide for themselves. Whoever still wants to pay off a house at 75, has lived well until then, and leaves something for the kids, bravo, I want to take a different path.

Exactly. There is no right or wrong. I only want to show the uninformed reader, who grew up with Prussian virtues, an alternative.

The thing about 75 is actually a good example. Let's play through the scenario.

The children should be 35 by then, working independently, and definitely finished studying. Suppose we financed €500k over 40 years and simply and wrongly divide the 500 by 40. Then we get €12,500 per year. I know that with interest it's more, but so what. With repairs, etc., there should be a maximum of €50k left in debt in the absolute worst case.

At 75, I hopefully will still be alive for 10 years. That means my children would only get access to the house at 45. In my opinion, the probability that they actually need this particular house is very low. So regarding the inheritance, it would at least have to be sold, or one child would have to pay out the others. Even if I die at 75, the house should have kept its initial value of €500,000 due to general property appreciation or inflation. Thus, €450,000 in assets should have been created.

I am very grateful that my parents sold their house two years ago due to a job-related move. First of all, I have no interest in ever living in that village. My sister is more interested, but for her it would be a challenge to buy me out. So the house was probably sold. Whether the net result was €250k, €300k, or €350k is "irrelevant" to me because I don't need the money and never included it anywhere. In my youth, I would have needed the money badly—and urgently—; at 45+, it's then a welcome special repayment or a new car, etc.

What I want to get at, and hopefully that can be seen somewhere between these lines, is that for the house my parents paid off when I was young, I came at most for hiking holidays in the Eifel for 10 years. My parents were not poor with the house and in the countryside, but had a hard time with every class trip and schoolbooks or a new PC, etc. And I had cheap hobbies; skiing, mountain biking, or any costly equipment-intensive stuff they could not afford because of the rates.

Now I come along, play for time due to the current interest situation, and want to offer more to my children. I am not saying per se that the Eifel is rubbish; only that sometimes there might also be Bavaria or (South) Tyrol.

The wealth will grow anyway, whether paid off or not. Unless I kick the bucket at retirement, no one will inherit debts. Even if so, the balance of remaining credit and house value should always be positive. I see no big advantage in being debt-free in my mid-50s, since I can still ride to high mountains without an e-bike right now. Now I also still come down the mountain without a pelvic fracture and at good speed. Later, who knows?

no one will inherit debts.

Just a brief addition. Nobody HAS to inherit debts anyway. One can also renounce the inheritance. So for the children, there is only the option to come out with 0, or to inherit some assets.