Financing terraced house around 1970, solid. 150k equity / 550k loan / 5k equity

Newly registered and straight to the essential question :cool: Can/should we actually afford this?

Framework conditions:

[*]Me (44), civil servant, 4.5k net (LSK 4) about 650 more after annual adjustment
[*]Partner (42) currently without equity
[*]Children: 2 (elementary school age), child benefit (420€) and definitely no more
[*]Equity: usable 150k€, 30k in reserve, but intended for a necessary replacement of the 2nd car (small/lower mid-class for daily commuting) and possible minor adjustments
[*]2 capital life insurances, currently with 40k surrender value (200€/month) and tax-free payout of about 110k in 15 years conservatively
[*]House incidental costs calculated with 4€/sqm
[*]other special monthly expenses: health insurance approx. 200€
[*]work-related move to Berlin from "further away"

Property:

[*]Terraced mid-house approx. 1970, solid construction
[*]Location: Berlin
[*]Price: 645,000
[*]Purchase incidental costs: 50k (no broker)
[*]4 rooms 100sqm + approx. 15sqm heated study in the basement
[*]recently modernized: sanitary, heating, electricity, garden and freshly painted as well

Financing:
550k financing amount over 15 years fixed interest at 1.05%, repayment approx. 2.9%, rate 1,750€, remaining debt 300k

I’m aware that this is quite substantial, but in Berlin in this location (necessary due to foreseeable job changes within the authority across Berlin) there are simply no other/cheaper properties currently. Alternative would be renting, but rents for an apartment of comparable size are currently also between 1700-2100 cold. Condos are mostly attic apartments without elevator, often hurriedly converted to use every last square meter. The house would be basically move-in ready without actually having to do anything and except for exceptional things, nothing is expected in the next 5-10 years.
Personal calculation:
500 € tax refund (could theoretically also go to LSK 3, then I would have it monthly in my pocket, but I would see it as a "mandatory" savings rate for maintenance/upkeep for house/car/household appliances
4.5k + 420 child benefit = 4.9k
4.9k - 1.75k installment - 400 incidental costs - 200 health insurance - 200 life insurance = 2.35k
So 2.3k for daily living, car running costs, Netflix etc. Should actually be enough.

The idea was not necessarily to pay off the house completely. It is a way to avoid the extreme rents at the moment. In 15 years there would still be a 300k remaining debt. However, we would also still have the 100k from the life insurances and the youngest child would then be in their early 20s and thus practically out of the house. Depending on the situation, we could either continue paying off or sell and look for a retirement home. Assuming the house retains its value after a real estate bubble burst and inflation, it would still be a decent value for a small condo or actually rent depending on location, depending on how the market is, and without children you are more flexible then.
Long story short... is this well thought out or just a financial suicide mission? Thanks for your assessments!

PS: This here is my worst-case scenario. If my wife finds a part-time or full-time position quickly, even with just 1k net, then of course it looks more relaxed. My increases due to salary negotiations and experience levels are not included, but would rather go into compensating inflation of the cost of living.

What about the windows, roof, and insulation? Have they been renewed as well? How likely is a job for your wife? I would base my decision on that. And keep in mind that the house might not be permanent and could be sold upon retirement. As the main earner, you are also quite "old," even though you will certainly receive a good pension. 2.3 is doable for a family of four. But it wouldn’t be comfortable for my family (especially when you still have to save for vacations, a new car, the children’s education, everyday contingencies, and yet some renovation work).

That will work, but I agree with my predecessor: comfortable is something else. Income from your wife and everything would be fine.

Another question: €200 [PKV] for you and your two children? Where is that available?

Long story short... is this well thought out or just a financial suicide mission? Thanks for your assessments!

PS: This is my worst-case scenario. Of course, if my wife quickly finds a part-time or full-time job, even with just 1k net, it looks way more relaxed. My increases from salary negotiations and experience levels are not included, but would rather go towards offsetting inflation in living expenses.

I find that quite justifiable. But it also depends on your lifestyle.

You still have a buffer of €6k p.a. from the tax refund besides the 2.3 for living expenses. I would do it like that without much second thought.
A nice apartment in Berlin is not cheap despite the rent cap (and thanks to the rent cap the rental situation is tighter than ever).

What about windows, roof, and insulation? Have those been renewed as well?

If not, it’s not a big deal for now. Although I bet the windows have at least been upgraded at some point. Re-roofing in a few years shouldn't be a dealbreaker for you either.

and the youngest child would then be in their early 20s and thus practically out of the house.

Out of the house, into university. Then it really gets expensive ;)

But those are problems for tomorrow, I would do it anyway.

So 2.3k for daily living, car running costs, Netflix, etc. should actually be enough.

Yes, it should be enough. You just have to avoid expensive vacations and cars. I hope those things aren’t very important to you anyway.

Thank you for your answers! I would have thought there would be more "resistance," but it seems to be okay and at least somewhat well thought out.

What about windows, roof, and insulation? Are they also renewed? How likely is a job for your wife?

Oh yes, windows less than 5 years old, the roof is flat, so not the most complicated, and insulation is probably the top floor ceiling according to the Building Energy Act, but that would be covered in the 30k, doesn’t seem to cost the world. I estimate the job at about 80% within the next 12 months.

Another question: 200€ private health insurance for you and your two children? Where is that available?

Supplementary aid for wife and children. Mine is already covered and outside of the income.

I think that’s quite justifiable. But it also depends on your lifestyle.

Yes, the lifestyle certainly has to be restricted a bit at the beginning, but not massively, if only to see how it actually develops monthly. But cars would, for example, be 1 new + 1 at 4 years old, which should be enough for the time being.

Out of the house, into studying. Then it gets really expensive ;)

She should hopefully be halfway through by then and we will already know how things stand with us and whether we still only have to eat rice with vegetables. o_O