First home financing for house purchase - short-term and at a loss

Did you go directly to the LBS or rather to a Sparkasse?
The important thing is first to find out how much you can actually pay per month. If I calculate your comment from above, I come to €800 and not €900 ("€200 lying around unused").

Um, yes:
I also skimmed the "spoiler" just now: Can you only afford €900 in credit costs if one of you reduces working hours and income because of a child? Are you aware of what else a house costs besides the loan?

First clarify what you want to pay monthly and then have all offers calculated with that amount. It doesn't help to compare offers with different rates.

If you calculate with different monthly amounts, it is no wonder that you get different results. Get different offers and compare them with the same monthly rate. The LBS is primarily a building society; it is clear that they want to sell you a building savings contract.

And if you have spoken with a Sparkasse, they generally want to sell their products from their group to everyone over 15 years old (meaning a building savings contract from LBS). There are only very, very few Sparkassen that have real estate loans longer than 15 years in their product portfolio. They just sell what is offered.

So, the bank forecloses on the house, or how am I supposed to understand that?

The bank would resell the house as it is for €190,000. That's what they told the current owner.

Did you possibly forget a zero? Or has someone professional inspected the house?

So the condition is as follows: New laminate flooring, new wallpaper, painting, and getting the garden into shape (which is secondary). The house also has 3 bathrooms, one of which is basically in shell condition because it was being renovated and the work stopped (materials have already been purchased and will be handed over). An inspection with an expert will take place on Thursday since I saw a damp spot in the basement and don’t know what else might come up. Then I will also have a more precise figure for the renovation costs. I would do many of the tasks myself because I’m not completely clueless with craftsmanship, unlike with finances. Aside from floors and walls, I see (perhaps somewhat naively) no urgent work that would prevent moving in.

And that’s not the only monthly cost for the house. There’s also additional costs of about €2.5 per sqm = €350, plus €140–210 for maintenance reserves of 1–1.5 sqm.

Exactly. The LBS also pointed that out to me. The monthly costs would be around €500–600. However, they also said that the rent for the previous apartment would no longer apply. So you could “offset” the operating costs, and the additional burden would be the interest payments and principal repayment.

Did you go directly to the LBS or rather to a Sparkasse?

We went directly to the LBS. We also went to the Sparkasse, but they couldn’t really advise us so “professionally.” The man on site just typed our income and loan amount into the calculator (which is accessible to everyone on the Sparkasse website) and showed us the numbers. That was it. He didn’t even address the fact that there was a residual debt amount. So he would have let us crash with the follow-up financing, as I only found out afterward.

Can you afford €900 just for credit costs if one reduces working hours and income because of a child?

That’s also a question... No idea what a child costs. But it probably won’t be little. That’s why I always calculated with €800 installments in the best case. Then there would be about €400–600 left as a reserve for living. And then depending on the reduced salary of one + the salary increase of the other. Although both will hardly offset each other. But then again a tax advantage through marriage... These are factors you can calculate back and forth for weeks and still they are just assumptions at first.

If you calculate with different monthly numbers, no wonder you get different results.

That’s also a point I was concerned about. I suggested to the LBS lady to set the repayment quite high so that the loan is paid off quickly. Her suggestion was the 30 years with about €600 installments. The question whether it is even possible to have a shorter term (in consideration of higher installments) she completely overlooked in the conversation.

This is a "problem" with all banks. They want your best: your money. And always from their perspective. That is their interest and that is basically legitimate. YOU have to represent YOUR interests. And the interest rate situation in the future is unfortunately fraught with uncertainties. The low interest phase has now lasted for a very long time. No one can say what it will look like in 15 years. The current expectations are reflected in the corresponding interest rates. From my point of view, a quick repayment is always "safer" than extremely long terms with possibly even residual debt. All future influences (on salary, job loss, illness, divorce, etc.) simply cannot be predicted. Life just carries one risk or another. Therefore, you have to keep an eye on those you can influence yourself.

In that sense, the building savings loan would actually be the safer option, if I see that correctly. You do pay more interest, but in return, you have the low interest rate secured for the next 30 years today, because it will not change after the contract is concluded (I was told that at the LBS).