Financing strategy for purchasing a house with renovation needs

We are currently considering purchasing an existing property. It is a mid-terrace house from 1950. The house has a basement, two full floors, and a converted attic. Plot 210 sqm, living area 120 sqm.

Since the house is from 1950, some renovations are of course necessary. The front door and windows have already been done in recent years, as well as the bathroom.

The following needs to be renovated, along with our cost estimate:
- complete heating system (currently heated with gas stoves, individual rooms are still heated via air ducts). For example, radiators throughout the house and a gas boiler in the basement: €35,000
- roof insulation and new roofing: €35,000
- electrics: €10,000

We would definitely have the heating done before moving in, possibly the electrics as well, or later. The roof only once we are living inside.

The house costs €298,000.
Including incidental purchase costs, €330,000.
Equity to be contributed €100,000

Monthly income €3,500 net salary plus nearly €400 child benefit.

Now to the actual question: what is the most attractive financing strategy?

For example, we considered taking out a loan of "only" €270,000. That way, we would still have €40,000 left immediately for the heating system and small things for moving in, such as moving costs, painting walls, etc. The further renovations, like the roof, could be tackled in 1-3 years and financed via a KfW loan.

Or should we take advantage of the currently low interest rate and calculate the total renovation costs from the start?
That would be generously calculated as total costs of €430,000. Minus equity, that means €330,000. At first glance, it looks strange to buy a house for €298,000 and take out a loan of €330,000, right? What would the bank say about this?

Or are there completely different financing strategies for our case?

Thank you very much for the feedback.

I am facing a similar project. You should not forget the water pipes. Otherwise, definitely have everything done before moving in. Or do you want to tear open the walls for the electrical work after moving in? Or take the attic off the finished pointed roof? We do not have any problems with financing. You have good equity and such projects are not unusual. If you are not familiar, please go through the house with an expert before the purchase.

Thank you for the answer. Of course, an expert is mandatory for a 70-year-old house. How do you handle the financing? A combination of "regular" annuity loan and KfW? Everything all at once? Does your bank require cost estimates from the companies for the planned renovations if these costs are partially to be financed?

Yes, we are taking advantage of 50,000€ from the KfW. The rest is a standard loan plus a bridging loan because I already have a house that I will sell. So far, there has been nothing with cost estimates or anything like that. We are still exploring which bank is specifically suitable, or having it explored. Basically, it also depends on the personal contribution. Our future house, however, comes from the 1960s and the previous family (builders) have regularly invested. Only a few windows need to be replaced, for example. But heating radiators, central heating, electricity, and out of caution the galvanized water pipes. Bathrooms, walls, floors also need to be renovated. The structure is excellent and the costs for electricity can be reduced by personal contribution. Likewise things like the insulation of the basement ceiling and top floor ceiling. One week of work and little investment and you have energetically renovated, which increases the value. But I also already have an eye for weak spots from experience. I also know that not everything always runs smoothly. Because of this, we have built a buffer into the financing and set the equity from the house sale lower than estimated. You have to trust yourself. Also the stress involved. At the current house, I did almost everything myself. Really every single day there was a problem and something did not go as expected... If you have questions - ask

The renovation measures you have planned are all value-adding and will accordingly be recognized by the bank. Unless you want to do it yourself or have a 'friendly craftsman' do it. The bank needs an invoice. What you should quickly forget, however, is the idea of doing the electrical work or the roof only after moving in. That is impossible to absolute hell. Just don't do it. Are the bathrooms really in a condition that you will be happy with for the next ten years? I would also tackle that right away if that is not the case.

Hello, thank you for the answers. Regarding electricity, I agree that it obviously makes the most sense to have it done before moving in. Heating as well. But I actually see the roof as pretty unproblematic. We currently rent a house from 1930, and the roof was redone last year, which wasn’t really a big deal for us. Or am I overlooking something?

We just don’t want to do everything at once. Primarily not because of the cost, but because we wanted to move in first to get a feel for the house. And then calmly work out a detailed plan with an energy consultant and possibly an architect. What needs to be done and when. And what can be done but isn’t so important at the beginning, like the bathroom, for example.

Of course, aside from the fact that it’s annoying to have craftsmen in the house for 8 weeks. Theoretically, it would be possible, right? Or are there issues like electricity or water where you can’t really live there for several days?

Thank you.