Financing of construction projects

Hello dear community. Due to the great opinions in this forum, I would also like to hear your opinion on our project...

We plan to start our construction project in the 4th quarter of this year.

A few facts:
We are both in our mid and late 20s. Our current net income is €3,800 per month. Special payments are not included from either side (these come extra). Also not included are some smaller activities on my part, which amount to around €1,500 (net) per year, but I do not want to factor these in for financing. We live in West Saxony, so the cost of living is somewhat more reasonable... :)

After deducting all costs (insurance, gasoline, phone, car loan, pension provision, etc.), we currently have €2,900 net together for credit, food, house incidentals, and clothing. We have no children but plan to have them in 2-3 years.

Our income will continue to rise due to our activities in TvöD.

We have a plot of land worth €25,000 (for which we only have to pay €100 per month over the next 12.5 years (longer story :)) We also plan with equity capital of €35,000. In reserve, we currently have another €20,000 until next summer, and after the house is finished, we will certainly have another €20,000 - €25,000 more... so about €45,000.

We plan a loan of €240,000 as with the plot and equity, we want to reach about €300,000. The total costs (plot, house + additional costs) are calculated at €290,000. Due to many references with our builder, this price is guaranteed. This would mean we have €10,000 left for the outdoor area, which we plan to be very simple and low-maintenance.

What do you think, is such financing possible with our income? So we estimated a loan rate of €700 at an interest rate hopefully around 1.5%. Does a home savings contract make sense with €150 monthly for partial follow-up financing? For incidental costs for the house, I calculated €300, which should be about right for our region. The total burden should actually not exceed €1,200.

What are your experiences and thoughts on this?

Hello!

A brief note about the house: there are professionals here who can say more about the realistic construction price + additional building costs. The plot is already TOP. Saxony is a dream when it comes to land prices, I see that every time I visit home. Both in the public sector, so that fits. Good equity, healthy calculation of the additional costs for the house (usually rather too much for a new build).

I wouldn't go for a home savings contract at this interest rate level; it costs unnecessary money. Better to choose a fixed interest rate of at least 15 years and calmly have them offer 20-25 years. Always start with the house bank, then approach 1-2 large brokers. The only downside I see is that you don't have children yet. Kids cost money (part-time workers, childcare). Here you should realistically calculate what will happen in X years, can we refinance without problems. Good luck!

The rate is definitely too low for the credit line. And to assess the total costs, quite a few details are still missing. Also, I doubt that you will start building in the 4th quarter if you are just beginning to plan now. Is a land charge registered for the [Grundstückskredit]?

It's only about the financing now, but we already had the green light from the bank (meaning that it makes sense to take care of such a project). The costs for the house are fixed, this construction planning step is completely finished and will be adhered to accordingly. (Other home builders always said to the construction manager: "If he asked for 280,000 and 23 cents, then you will also pay exactly 280,000 and 23 cents"). It's only about negotiating with the bank. No, the land officially belongs only to us... meaning only the land charge of the construction loan will be registered.

Regarding children, we currently plan that my girlfriend will stay at home for only one year and then go back to work full-time (as a childcare worker you usually have "only" 33-36 hours anyway). Our mothers would also help us a lot, we already know that :)

Planned once (wish)

240,000€ for 1.5%, 15 years
Installment 700€
Remaining debt approx. 160,000€

Additionally, a home savings contract with 200€, 15 years, the interest rate will be somewhere around 1.9 or so.
Sum after 15 years: 36,000€, which will flow as repayment into the first loan
Loan credit from home savings contract about 90,000€

160,000€ remaining debt - 36,000€ repayment from home savings contract = 124,000€, of which 90,000€ can be financed at a good interest rate. The remaining 34,000€ must or could be repaid over the first 15 years....

Would that be roughly logical? :)

why not put 900€ into repayment instead of a more expensive [Bausparer]? Have you considered all ancillary building costs, garage, outdoor facilities, ground and painting work? We managed with a similar budget 2-3 years ago, but since then the energy saving ordinance has become stricter and construction prices have also increased.

Here is some more reading material