Financing house construction - Assessment and securing interest rates

Hello everyone,

My wife and I have been considering building a house for some time. Here are the "basic facts":

- Both in our early 30s
- Combined income about €3500 net at the moment. At least €1000 remain each month.
- Plot is available and developed
- Equity about €150k (savings account, stocks...) available
- Building location: near Munich
- There is still an old house on the plot that needs to be demolished
- No home savings contract or similar.
- The "plan" is a small house, no garage, basement not necessarily required.

We have already read through thousands of pages on the internet, asked various people, etc., but somehow still haven't really gotten a "feeling" for whether it is "sensible" to deal with the subject given the above conditions, or what the best way would be.

What we have of course noticed is that the loan interest rates are currently extremely low. Then my second question: Is there a "sensible" way to "lock in" the interest rate now if you want to build in the next 1-2 years? As far as I understand, solutions with a home savings contract unfortunately don’t apply here.

Many thanks in advance for your assessments/experiences!

I can't think of any way there. Forward and co. are nothing due to lack of concrete planning. Maybe a home savings contract, which you can bring to allocation quickly through your equity (with all the disadvantages). But that won't fully cover your building sum. "Unfortunately" you already own the property, otherwise you could have financed it. It would still be possible now, but then you'd have the money sitting in the account for years and pay interest on it... no

Land available and 150k equity... Why don’t you just build right away? A nice little house should be possible for 350,000€... less your 150,000 leaves 200,000 in loans - those are well manageable with 3,500€/month - if you already have child(ren), check out Bayern Labo.

Thanks already for the quick feedback - we are not building right away because my wife is currently working in another city (for another year), I am frequently on business trips, and therefore we do not have the time right now to take care of building a house. So, Ghostwriter’s answer does actually make me hopeful - maybe just "wait and see," and then build with possibly somewhat higher interest rates in about 1.5 years or so? No children (yet).

But include children. How long does your wife (or you) want to stay at home? That is crucial for the rate.

Effectively, you can already start with the house "construction" now. It can still take several months before you decide on a construction company or architect. Once you have decided, you go to financing. Until everything is finalized (and you take your time), it will be the beginning/middle of next year. It also takes a few more weeks or even months for the building application to be approved, and before you know it, it will be autumn 2018 and, with luck, you will start your construction. By then, your wife will also be back in the country.

Count children in, because of the missing income for the time? Or how was that meant?

But basically you’re right, maybe one should at least once deal more with the topic / look around for construction companies etc. What would be the first step there? Do you just naively go to architects / construction companies and get advice from them, or what are the first points to consider? There is still an old house (as written above) on the property, that has to go first...