Financing project for a single-family house in Münsterland

Hello,

last year we purchased a plot of land near Münster and now want to start our construction project during the course of this year. The planning is already quite advanced, although not yet finally signed. It will be a house with 150m2 including a finished attic and basement. Now to the financial part:

My wife and I (38 and 37 years young) have 2 children (2 and 0 years old). Our income is as follows: She earns 3200 net (civil servant) + child benefit (350€). I earn 1800 net (parental allowance); in 4 months I will work full-time again, which will amount to 3100 net. My wife will then go part-time (60%) and the child will go to daycare (with the first child it worked great that she increased to 70% after a few months; I hope it will be the same now). So we will have about 5000€ on the income side. On the expenses side, we have 2 cars (500€), daycare (500€), rent with additional costs (800€), food etc. (500€), private health insurance (200€), home savings contract and retirement provision (300€), loan for the plot of land (800€) [remaining debt 35k€]. Thus, at the moment we have about expenses of 3600€. After refinancing or moving into the new house, we would thus have expenses of 2000€ + additional costs 300€.

We have invested most of our available equity in the land (purchase price 149,000€) as well as the incidental costs (real estate transfer tax, notary costs, surveys, biological assessment, soil survey). We have taken out a loan of 40,000€. We still have about 40,000€ in savings, of which we received 18,000€ as a loan from family (which we of course want to repay over the next few years, and we have lent 12,000€ to others, which we will get back). Therefore, I would set the equity at 160,000€, right? Furthermore, there are 3 home savings contracts (one with over 4% interest we want to keep until it is terminated by the bank (currently 12k€), one is ready for allocation (3k€) but with an unfavorable interest rate, and one that currently has 10k€ but still has to wait a few years until allocation).

Our home construction company has the following cost breakdown: Shell construction 210k€, basement 41k€, soil disposal (based on expense, I think around 15k€ (probably less), since the local landfill will probably accept the soil), extras in the building (already chosen) 40k€, not yet calculated extras 30k€, sewer connection + other connections 15k€, kitchen 10k€, garden, carport (will be done by a friend in own work) 15k€, wastewater/rainwater disposal 4k€, possibly interior plastering instead of textured wallpaper 10k€.

With a few more items (to keep the list from being too long), this results in an estimated financing requirement of about 430k€. We have conducted initial financing discussions which forecast a monthly burden of 1700€ over 30 years. Since we would prefer a somewhat lower rate and rather make special repayments, the advisor put together a structure for us (no idea how unusual this is) which includes the following:

1. 100k€ as a full annuity loan over 20 years
2. Interest-only loan for 20 years in connection with a home savings contract that takes over after 20 years and offers us a relatively good interest rate.

However, I have read more often that such a structure is in most cases worse than a normal annuity loan, which in the comparison offer with 20 years fixed interest is about the same and appears significantly better against one with 25 years fixed interest. (Our plan is to repay the loan in 20-25 years thanks to special repayments.) Therefore, I would like to ask for your input.

I have a meeting with Interhyp the day after tomorrow for a comparison offer, but I would like to go there with somewhat better-informed information, so I would greatly appreciate your feedback on this.

PS: Sorry for the long text :)

Hello, if not you, then who...

very high equity, civil servants, 2 children and high net income.

Exactly right to ask intermediaries. Whether a home savings contract is the right thing, well rather a full repayment loan with special repayment.

We have conducted initial financing discussions, which predict a monthly burden of €1700 over 30 years.

2. Interest-only loan for 20 years in connection with a building savings contract that takes over from 20 years and offers us a relatively good interest rate.

Whether a building savings contract is the right choice, well rather a full repayment loan with special repayment

One only knows if it is the right choice in the end when the total costs for this component have been determined in both variants and then compared. A 30-year full repayment loan with special repayment is now not so common on the market.

A good building savings contract/loan combination can already become cheaper. With most building savings contract loans, special repayment is significantly more flexible than the usual 5%.

At least the building savings contract/loan also has no interest rate risk for the entire calculated term.

Thanks already, that reassures us a bit. The plan is to be debt-free in a bit over 20 years (oh my God, that is a long time), so I’ll have another offer made with a 20-year fixed interest period. Since only my wife is a civil servant, we wanted to make sure (just in case) that we could manage the loan with just one person, hence the somewhat lower repayment rate with special repayments. Well, we’ll see what the advisor says tomorrow. One other question by the way: if we include the carport and a roof over the terrace in the building application (to save ourselves a later architect etc.), do these have to be built right away from the financing side, or can you take 2 years for that? In other words, does the bank agree to that?

Thanks already, that reassures us a bit. The plan is to be debt-free in a little over 20 years (oh my God, that's a long time), so I'll ask for an offer with a 20-year fixed interest rate. Since only my wife is a civil servant, we wanted to make sure (just in case) that we could manage the loan with just one person, hence the somewhat lower repayment with special repayments. Well, let's see what the advisor says tomorrow. By the way, a different question: if we include the carport and a roofed terrace in the building application (to save ourselves a later architect etc.), does that have to be built immediately from the financing side, or can you take 2 years for that? I mean, would the bank agree to that?

It depends. If you include it (since it also adds value), most banks require the equity to be brought in first. It would be bad if there is still a remaining amount of the construction financing left that you only have to draw in 2 years... so I would hold back equity for that. Why don’t you build something like that right away? Money will be missing later on.

The carport will be completed by own effort, and that is simply easier when the house etc. is standing first, the terrace roof could be directly included, that is true. Need to do some calculations again. Some banks give [Besserwissern] at 70% equity. Maybe we can still get below that.