Financing house construction project 2020

Hello everyone,

I would like to get your assessment of our construction project.

My girlfriend (27) 1500€ and I (31) 2600€ have a net income of 4100€ and have the wish of owning our own little house : )

Since our income is not very high, it was clear to me that we first need quite a bit of equity. We have been saving since 2011 for our dream.

The plot is owned: 385m² - 57750€ - gift

Current equity: 164000€ - saved up

The house will be a city villa with 135m² and we already have offers.
House costs will be around 320000€. I plan to allocate 120000€ of equity, so we would need a loan of 200000€ for 25 years?

What interest rate can we expect?

For the kitchen and possible additional costs, there would still be 44000€ available.

We would like to repay with 750€ so that we still have some room.

Thank you very much! : )

What interest rate can we expect?

Visit the house bank, intermediary, or an online comparison portal.

Otherwise, the typical ancillary construction costs are missing from the cost breakdown. Or are these included under "additional costs"? Nothing will remain from the €44,000.

You have a lot of equity. I would go higher based on a gut feeling.

Yes,

The ancillary building costs are already listed in the house offer with €30,000.

You can type that in on any calculator. Good conditions, should be achievable with 300€ interest per month.

I'll put it this way... with €221k in equity, you don’t have to worry about the interest rate. For €320k for 135 sqm, the additional costs have probably already been factored in by you, because at €2590 per sqm, there would already be a lot of equipment included.

Personally, I wouldn’t finance €200k over 25 years. I don’t want to downplay your €200k, but that is nothing as a home construction loan (meaning too little).

Actually, I am an advocate of long terms, but here I would set it at 10 years and put the delta into repayment, even with your income.

EDIT: Currently 0.47% interest for 10 years with 4% repayment and a remaining debt of €118k without special repayment after 10 years. That makes a rate of €745.

And the few thousand euros per year to knock down the remaining debt with special repayments you should also have.

I agree with and would rather choose a somewhat shorter term. I would take out 220k€ over 10-15 years; if anything is left over, you can directly use it as a special repayment, and the bank will not care at all given your loan-to-value ratio.