Fixed interest rate financing without equity?

  • Erstellt am 2014-10-26 16:23:48

AndreasRK

2014-10-26 16:23:48
  • #1
Hello dear forum!

I know that it is actually taboo to finance house construction without equity, but I now dare to ask the forum whether our building project is feasible. We are a family of four, with two children - 16 years and 6 years old. Both parents have permanent employment contracts, and the monthly income is about 3800 euros. We currently live in a 3-room rented apartment, which is simply too small for us now, in a village 3 km from the city where we would like to move. Actually, we were looking for a 4-room apartment to rent until we came across an offer. A semi-detached house with about 100 sqm, with a small plot (380 sqm) and a prefab garage will cost around 190 thousand euros (plot - 36 thousand euros, the house 125 thousand euros, additional building costs - 20 thousand euros, painting, floor, and outdoor facilities as own work), which absolutely meets our wishes. As already mentioned, we have no real equity, but 7-10 thousand euros in reserves. The advisor's offer consists of financing from the KfW home ownership program and a bank loan, which burdens us with 650 euros over the next ten years.

I am of the opinion that we still need to save, but my wife and the advisor, of course, think that we should do it now, as the interest rate is at its lowest level. We currently pay 600 euros rent warm, and 850 euros per month (financing and incidental costs), from my wife's point of view, we can manage without really tightening our belts. I am now 38 years old and my wife 35, our goal would be to pay off the semi-detached house completely by retirement. Is this possible?

I thank you in advance for many honest opinions.

Sorry for my spelling, German is not my native language.)

Best regards, Andreas
 

emer

2014-10-26 18:24:34
  • #2
How much money should be borrowed?
What interest rate?

So how are the €650 p.m. made up?
 

DNL

2014-10-26 19:01:12
  • #3
Why have you not built up any equity so far?
10 years sounds like the fixed interest period. Why not a longer fixed interest period?
 

ypg

2014-10-26 19:45:17
  • #4
What is the material for the own contribution paid from? Is it included in the calculation as well as small extras like e.g. sockets?

Quick response on the go
 

lastdrop

2014-10-26 21:23:44
  • #5
I think that if you are financing at the limit, you should at least eliminate the interest rate risk, namely through a long fixed interest period.

EUR 211.- repayment/month I find absolutely very little in absolute terms.
 

AndreasRK

2014-10-26 21:51:16
  • #6


Thank you for your opinion. How could it be more optimal for us now? Should we take out a loan with a 20-25 year fixed interest rate period and increase the repayment rate? That would be possible, but I think only in a few years, when the biggest effort is already behind us. It does say that we can change the repayment rate twice free of charge.

Would that make sense in our situation? Or rather not?

To be honest, I have spent a few hours reading here in the forum and I am becoming more and more skeptical. I am about to communicate the rejection to my advisor, even though such an offer is very attractive.
 

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