Financing question for the dream of a house

Hello everyone.
My name is Steve and I have been reading your forum with interest for quite some time and following many of the threads described here. Much of it confirms our plans, while some of it unsettles me a lot again.
That is why I now want to address you directly and have some questions assessed from a different perspective.
My question is therefore more directed at the people who, despite all the warnings from friends, colleagues, and also forum members, have nevertheless realized their dream.

What is it about?

My wife and I have pretty much the same conditions as some of the thread starters here.

Together we have an income of just under 3500 euros, both working permanently in the public sector. No children yet. Have various additional incomes and the most important thing... hardly any equity (25,000 euros). And we also want to fulfill our dream of owning a house.

In short: This dream brings us a total volume of 319 thousand euros. (all inclusive - building plot, house with 160 sqm without basement, ancillary construction costs, etc.).

We have a financing offer from PSD Bank with a fixed interest rate of 2.65% for 15 years (269 thousand euros + KfW 50 thousand euros) and a resulting monthly burden of 1,020 euros.

We know that this is a lot. And we are advised against it from every side. We are aware of that!

So now my question to you. Is there anyone among you or people you may know who, despite this (or a similar) difficult situation, still dared to take on such a project? If so... Has your life really been restricted so drastically - as everyone told you - or just within what you consider a (normal) range? Can you still live well? Or do you look back on your decision as a mistake or burden... questions upon questions...

But simply asked: How are you doing?

I look forward to your answers.

Thank you very much

Greetings from Middle Franconia,

Steve

The interest rates and the term are already good, especially considering the equity. Without calculating it now, €1020 sounds like little repayment. Please also consider the at least one year repayment-free period of the KfW. That will mean correspondingly higher expenses afterward.

All in all, one can only speculate about your situation.

You can listen to concerns from family, friends, or strangers in a forum, or not. What is important is that you do not fool yourself in the calculation.

I can say that €1500/month is never enough to save. Others manage with that for 2 months. You maybe only for half a month.

I have compared tables of our fixed income against ALL monthly expenses (average of recent months + 5% buffer) + reserves. If there is still a plus in the bottom right corner, that is already good.

Then I made myself a loan calculator. I enter my loan requirement, the budget for repayment, the current interest rate, and the maximum term of my repayment (e.g., 25 years). If the result is all in the green, I can still adjust the repayment rate to possibly reduce the term and I know it fits :)

Then you can note the opinion, whether for or against, but you know what fits for you. If my program says it does not fit into the budget, I have to make compromises or get my job to pay me better :)

We ourselves have not built yet. The development of our plot is not that far yet. But I have been intensively dealing with our finances in connection with house building for over a year.

In general and looking at the numbers without comment, I would personally do it.

With regard to repayment and term, again no. Although I would not dare more repayment with that budget either. Not to mention children.

Hello Erner,

thanks already for your assessment. These exact thoughts have crossed my mind as well. I even drew diagrams to get an overview of the coming years and expenses/income. And after many conversations with home builders and friends etc., I calculated my expenses and remain in the positive. But my question is whether there are people out there who, despite tight forecasts and all warnings, have gone ahead with financing a house and how these people are doing now. Do you perhaps know someone who is or was in such a situation?

PS: the financing rate already includes KFW after the interest-free period. 1020 euros are 1%, but we will pay off a second percent per year with 3600 (saved over the months)!

The question is dangerous. Because in the end, you will listen to those you want to listen to, or rather, to what you have already biasedly imagined. Five will say it works wonderfully. And five will say that after 10 years there was a forced auction. What will you do? You just have to search long enough, then you will find people who built with even less money in their pockets and say it went well.

You are absolutely right, of course. However, I keep hearing from people who only have to pay 600 euros in repayments and earn more than we do (but have a similar standard of living as us) and are just about managing. I know that I can't really find an answer for my life through others. I just hope to hear something positive out of all the negative! Because I think everyone was really advised against undertaking such a project in the "current" times.

Hello, 2,500 for additional costs and living expenses is completely sufficient for a normal household. Holidays etc. are also included in that. But how does your calculation fit with a child and only one income? Why are you only repaying 1% and saving 3,600 EUR for a special repayment (... which you probably will not be able to afford, as most beneficiaries do not do because more important things always need to be paid first). Besides thinking about the house, also think thoroughly about your life planning. Children are EXPENSIVE. For comparison, we earn about 4,200 net (one earner + wife with three small children) and afford a monthly rate of 1,500 EUR. Despite the large family, we believe we can live very well. Holidays, eating out, clothes, etc. work out. However, we have also been keeping a household budget for years and knew what was coming.