Financing with children, subsidies, parental leave, probation period

Sorry but 2 children and then 50 EUR for clothes per month? You can get 2 pairs of children's shoes for that...

You can check that quite easily in your tax assessments. Because it looks back into the past:

That suits us.

You buy the cheaper interest with the interest rate risk (and you can be almost certain that the interest rate will be significantly above 0.71% after 10 years).

I don't see the rising interest rate as quite so dramatic here, since after 10 years about 1/3 will have been paid off and the installment until then already includes a sensible repayment.
Assuming a remaining debt on the KfW loan of €85,000 with an interest rate of 6% and another 20 years of term, the installment in this example would increase by about €220. That probably shouldn't derail us.

More critical is the housing construction program with 0.5% interest and 1% repayment. It's great for the 15 years, but then there will still be > €100,000 outstanding debt. And then a high repayment rate is needed to pay it off in the next 15 years. Assuming 6% interest, the installment then increases by more than €700. Even if interest rates fall back to 1%, there are almost €500 in additional costs because something has to be repaid... Therefore, the plan would be to build a cushion here so that the remaining debt can be reduced at the end of the fixed interest period.

The big BUT is actually the probation period and parental leave. In our financing, parental allowance was taken into account if there is proof from the employer that immediately after the parental allowance, an income of at least the same amount is available again (without a gap).

Without a gap it probably won’t work. Parental allowance is only paid for the first 12 months and the planned parental leave currently amounts to 24 months.

Currently (and for quite a while now) almost not at all (!). Even fixed-term employment contracts are considered sustainable (depending on the type of job/qualification).

That’s good to hear, that banks are no longer so narrow-minded on this. In my opinion, the probation period also has far too much importance in the minds of many people. As you said, a completed probation period is no guarantee of lifelong employment. For most skilled workers, the probation period is simply a formality that's included in the standard employment contract. For unskilled workers, it might look different again.

Parental allowance is taken into account if it is foreseeable that at least the same salary will be earned after parental leave. For example, if there is confirmation from the employer that one will even earn more after parental leave, we even consider the future salary as sustainable.

Does an employee bind themselves to anything with such confirmation? Imagine: one obtains confirmation that they will return to work at 50% after parental leave and thus receive x € salary. Later it turns out, for example, that only 25% fits into everyday life. Are there problems then?

Sorry but 2 kids and only €50 for clothes per month? You can get 2 pairs of children's shoes for that...

I only quoted my household book here and rounded up a bit in this case. We have spent an average of €37 per month on clothing over the last 4 years. In the last 12 months, it was actually only €29 – and during that time our eldest changed clothing size 3 times...
There are plenty of bazaars where moms sell partly unworn children's clothes for little money. Expenses for clothing can of course still increase a little in the coming years...

Does an employee become bound to anything by such a confirmation? Suppose you have a confirmation that you will return to work at 50% after parental leave and receive x € salary. Later, you realize that, for example, only 25% fits into your daily routine. Are there any problems?

No, it is completely unproblematic. At least as long as you can afford the rate with the lower income.

Regarding the probation period, I can tell you that nobody asked us about that. We had to provide proof of the last 3 salaries and that was it; luckily, my husband had just completed the 3 months by chance.

On the subject of expenses: I find the expenses for food quite high considering that your two children probably cost almost nothing so far. So expect more money. I buy for 4 adults because our two children are good eaters. Including school meals, we spend about 1000€/month. I grow a lot of vegetables and fruits myself, make jams, compotes, and syrups, etc., otherwise it would be more. However, my expenses also include drugstore items and pet food. The expenses for the children's clothing will also increase. Especially shoes. At school, they feel like they need dozens of pairs of shoes, and every school year there is an expensive wish list from the teachers for each child. And if the two children do not have the same teacher one after the other, unfortunately, much of what the first child used does not apply to the second. Used clothing with larger sizes also becomes more expensive and harder to find (greater wear and tear). And eventually, the children’s own tastes and trends come into play. Hobbies, personal transit passes, cell phones, etc. For you all this is still far away, but it should be considered.

What amount of working hours are you leaning towards after parental leave? You already have one child and might be able to roughly estimate.

We usually have an income of about 5000-7000€ plus child benefits and cover about 1600€ house loan plus additional costs; this works well with two older children. My income fluctuates a lot as a freelancer. At times I had no income at all because I had cancer at 32. Such modest misfortunes should be kept in mind. Even when you are young. At times we only had "about" 4000€, and I have to say that was often tight. Even though it is actually a lot of money, it somehow slips through your fingers.

To me, your situation actually looks good. Your wife should perhaps not extend her break too much and then return to work at least 50% or more. You have to calculate everything carefully and not forget things like her pension if she stays at home longer. She should not fall into the typical wife trap.

Children become expensive with school. The calculation would be too tight for me, especially if there is flirting with a third child. At your age and with the current income, I would actually wait five more years to buy the house.

Small side note: With the constellation (3/5 + Elterngeld), be prepared for a hefty tax bill. I speak from experience.