Financing: What interest rate lock? What goes into the budget?

  • Erstellt am 2016-11-10 00:14:28

Hausen

2016-11-10 00:14:28
  • #1
Hello everyone,

I am the new guy who has only been dealing with the topic for a few months but still has many questions...

I’ll start with the key data:

We (my girlfriend and I) are in our early 30s, in secure permanent jobs, and earn a combined net income of €4500, with an upward trend. We plan to have children in the next 2-3 years. After parental leave, work will initially be resumed at 50% and after a certain period, full-time again. We currently rent but have recently decided to change that and invest in or build a property.
Equity... hmm... under €15k, so let's say it’s non-existent.

I don’t really know how to structure the question(s) because there are various possibilities and I also didn’t know which forum would be best suited, but well, I’ll try my luck here since the focus is financial.

1.) I know no one can answer concretely, but... we aim for a solid house with about 160m² of living space. Plots of land that could be suitable cost around €50k, excluding additional costs.
I have a hard time estimating what a solid house of 160m² with medium-level fittings would cost.
Of course, it depends on details, technology (heating, KNX (which is definitely not affordable, so it wouldn't count as medium level for me) etc.) and materials (insulation, roof, etc.).
Let’s assume simple to medium fittings, whatever that may mean.
Assuming we would also like a basement, what price range can we expect here?

Plot: €50k (excluding additional costs)
Solid house with basement: approx. €180k - 230k (excluding additional costs)?

Total sum including all additional costs approx. €350k? Somewhat realistic or a pipe dream?

2.) Financing the whole thing... if the above amount is correct: financing for €350k.
€4500 net income. Is that even remotely possible with the above amount?
When I try all the loan calculators and enter €350k.... well... you know yourselves...

Could it be that this project was doomed to fail from the start?
If not, does that mean very big restrictions?
Regarding the current financial situation, you could say we live like small maggots in bacon (feel wise). Twice a year we go on a long-distance vacation costing €3-5k each time, often eat out, and generally don’t have to watch our money too much.
Rent is about €750 warm. Furthermore, we can count on planned salary increases. Also, we will definitely get married very soon. Both will also affect the income... although children in 2-3 years will again have a counter effect.

3.) If 1.) and 2.) can be reconciled...

Closing the financing... my plan so far would have been a fixed interest rate for as long as possible, ideally 30 years. Is that even worthwhile? There’s a 5% prepayment option everywhere anyway, which we would also include. Unfortunately, I don’t know enough about alternatives. Is it worthwhile to take advantage of subsidies, or is that even possible with the planned house size/type/amount? Well, better stick to the core question of this point: if financing, then a long fixed interest rate desirable given current times or rather pursue other plans?

4.) Alternatives if 2) and 3) are doomed to fail...
Instead of building, is it better to buy a house? Is that worthwhile?
I have to say, over the last six months we have looked at about 10 properties and with one we had to really consider it, but decided against it. Basically, you can say the properties we liked cost between €170k and €250k and all had no great values (e.g. energy certificate) and quite a bit of renovation or refurbishment needed. Ok, if you want to spend as little as possible and can live in houses built in 1970 (which was the case for almost all we saw) and with partly 15-25 year old heating systems, partly no RCD in the electrical installation, you could say we could get a property around €200k-250k that you could live in. But... honestly... don’t you get caught up in renovation mania then? Doesn’t something break all the time? Don’t you have to do new things again and again? Keywords: new insulation, heating, roof, this, that, etc.? After 10 years of living in a 1970 house, isn’t it possible you end up with an amount that would have been enough for a new build anyway? You know what I mean... or surely it’s already obvious to everyone, but as I said, I am relatively new to all this...

That’s it for now.

I appreciate any help, be it criticism, suggestions, the naked truth, or alternatives.
Please bring it on.

Thanks a lot in advance.

Best regards

Hausen
 

HilfeHilfe

2016-11-10 07:33:00
  • #2
Hello,

the other participants can comment on your house price. Also whether buying and renovation are significantly cheaper.

You are young and understandably you treat yourselves. With 4,500 net, "only" 15k equity is too little for me. Are there any other loans, is something bigger coming up (car etc.)? You yourself have recognized that vacations, eating out, etc. cost money. Have you started keeping a household budget and saving fixed amounts?

I don’t believe you can manage with a new build at 350k full financing. When children come into play who a) cost money b) cause loss of income, it becomes even more critical.
 

Hausen

2016-11-10 09:01:39
  • #3
Thank you for the response. No loans. There's nothing else outstanding either. Household budget yes and no, but I would say it would definitely be possible to go out to eat only 2-3 times a month instead of 10 times and to be more disciplined. Because honestly, so far we’ve just been splurging, like we’re young now, no matter the cost. But one slowly becomes more sensible and thinks more about the future. Saving usually worked like this: when we had about 5k, we picked a nice vacation. That happened several times. In any case, I would guess that currently we could save about 1k in addition to the rent.
 

HilfeHilfe

2016-11-10 09:13:06
  • #4


Well, that's not really the principle of saving; for me, it's more like consuming that happens when the money is there.

You should ask yourselves if you want to and can do without something once a house and a loan are involved. You aren't married yet, after all.
 

RobsonMKK

2016-11-10 09:16:05
  • #5
*husthust* In your early 30s you still believe you are really young, but actually you are not

A few teeth to pull, or castles in the air to burst. I don't know where in Hesse you want to build, but you can quickly forget the price for the house, or increase it by about €100,000 with a basement and 160 sqm on top.
The calculation is simple and can be found a hundred times here in the forum. Take €1,500-1,700 per sqm. That already makes €240,000 to €275,000, but without the basement yet. For that size of footprint the basement as a WU [waterproof concrete] probably won't be available for under €70,000.
For a house of this size you also need a plot that roughly has at least 550 sqm (due to the buildable area). Then come the little extras like flooring, electrical upgrades, garage/carport, lamps, furniture.

Does the sqm where you want to go really cost under €100?
Let’s just take €150 as a healthy average price per sqm, then the land costs at least €82,500.

I’ll sum it up briefly: at least €310,000 for the house, at least €82,500 for the land, incidental construction or purchase costs are not considered: €392,500 to which you can add another €75,000-100,000 for ancillary costs and extras.
 

Häuslebau3r

2016-11-10 09:36:55
  • #6


Hello,

I have to admit that I stopped reading at this point. My personal opinion is that a house including a basement with a square meter count of ground floor and upper floor for this amount does not exist and is purely wishful thinking. (Possibly the brochure is already 15-20 years old).

I intentionally phrased it somewhat exaggeratedly, as in my opinion it simply does not correspond to reality at all. A house with a basement, whether standard construction or lower, with a living area on the ground floor/upper floor of about 160m², will easily cost you between 350k€ - 400k€. Plus garage choice (carport / double garage, etc.).

More detailed information on the other questions can surely be provided by other users.
Regards

Regards, Andreas
 

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