Financing scope for construction planning - assessment and experiences?

Hello dear forum experts,

we are currently still at the very beginning of potential house construction planning.

However, I would like to learn from the experience available here and get some assessments about what assumptions we can realistically plan with.
Of course, my main concern is the financial scope.
Here is our situation:

Project:
There are currently 4 of us living in a 100 sqm condominium – this still works well for now, but in the long term we want something bigger.
The goal is therefore to build a house.
This is what we imagine:
- Approx. 400-500 sqm plot – costs about 320 €/sqm here in Baden-Württemberg in rural areas – so roughly 150,000€ (land not yet purchased)
- House (standard) with 150 sqm, carport, (partly) basement.

Financial situation:
He:

[*]3700 net/month fixed (secure job)

[*]approx. 600 net/month special payments (also relatively fixed and reliable)

[*]400/month child benefits

She:
No income (currently parental allowance, which I do not count as it is temporary). No planned significant income in the near future either.

--> Thus, I calculate approx. 4700€ net disposable income (even if special payments are irregularly distributed)

--> Our long-term monthly expenses (EXCLUDING loan repayments/rent) conservatively amount to 2400€/month (documented). This includes everything (including vacations) – except major special expenses.

Capital
- Existing condominium: 225k (realistically estimated value)
- Encumbrance on the condominium: still 80k loan
- Cash reserves: approx. 40k
--> Thus, I estimate good 180k equity – is this feasible?

Everything is still quite at the beginning.
But I have three questions where I would like to rely on your help and experience:

- Is 450,000€ realistic for such a project given the land prices (preferably a prefab house), or do I have to expect significantly more?

- Is such a project financially feasible with our financial situation (repayment horizon 15-20 years)?

- How is a partially encumbered condominium viewed in financing which still needs to be sold? (should be relatively easy to sell due to location and condition)

Thank you very much

As you probably know, you have slightly exaggerated the household income. The bank basically only calculates with the monthly available income, meaning 3700€ + 400€, so that's rather 4100€. The value of the special payment for the bank depends on whether it is more of a bonus or holiday/Christmas pay. The bank does not include a bonus as variable salary in the household income at all (statement from the Sparkasse), because it can disappear at any time, no matter how you argue.

Then let's do the math:
- Land 150k€
- House min. 2000€/sqm at 150 sqm = 300k€
- Basement 50k€
- Purchase/ construction incidental costs = 30k€
- Outdoor facilities with carport = 30k€
Total = 560k€

My calculation is similar except that the land is 60k€ cheaper.

After deducting equity, that makes a 380k€ financing with a loan-to-value ratio of 70%.

Currently means 1.91% interest over 20 years with 2% repayment = 1240€.
Plus 400-450€ ancillary costs -> max. 1690€ housing burden. That is 2400€ living expenses + 1690€ = approx. 4100€

You see, it’s damn tight, but it could fit. However, this is not a recommendation from me, as the children will also become more expensive.

You will need the bonus anyway for special repayments so as not to be stuck at 33 years loan term.

However, you can forget about the targeted 450k€ house costs including the basement. By the way, also the partial basement, because it's hardly any cheaper.

Otherwise, from my side, welcome to the house building forum

Well, you already own property, which is great. I see a problem with the repayment of the old loan. Early repayment fees come into play. Or you change the property but are then stuck with the bank. Whether house and land is realistic must be judged by others. It’s too tight for that. How realistic is it that your partner could work part-time?

Thanks in advance, those are already some concrete numbers!

Maybe a few more additions:
- Of the 600€/net/month special payments, about 400€ are holiday/Christmas bonuses – so fixed. Let’s leave it at that. Are these included by the bank?

- Additional costs of about 300€ are already included in our current 2400€/month living expenses – so they would still have to be deducted from that.

- The old loan is still there, yes – but can be redeemed in 4 years – I would probably carry it along until then, possibly as partial financing. In case of emergency, a prepayment penalty would not be that high.

- Of course, there is still room for income increase – currently I work only 85% for the 3.7k net (intentionally) and could increase that again mid-term if needed. With my wife working part-time, the topic of “childcare for 2 small children” would come into play again. Probably at some point.
But first, the question is what is possible with the current situation.

- About the costs: is 2000€/m2 a realistic reference value? Is that a lot or little?

Thank you very much

...depends on what you include in the calculation. Actually, just the house itself is realistic. Of course, it depends on the standard. In BaWü, you won't get any special luxury for that. If you want a higher standard, I would leave some margin. By the way, a prefabricated house is not necessarily cheaper, possibly even more expensive.

Yes, your holiday/Christmas bonus will be taken into account but does not count towards the monthly income.

Purely based on intuition, if you want to build, you should not base it around the sale of the condo.