Full financing - young & naive?!

Hello,
I would like to hear an opinion from outsiders.
First of all: We haven’t had a bank appointment yet!

I will finish my apprenticeship in the summer, and my boyfriend has been working permanently for 3 years.
We both then have permanent contracts and together we earn a net income of 3800.
We have been keeping an eye on our expenses for some time, these amount to 1400 euros (without the current rent).
Because of our age and my (still ongoing) apprenticeship, we have not saved any significant equity, this is our main problem...

We would now like to move out of our apartment, the interest rates are also quite low right now, so we think this is a good opportunity!
We always wanted to stay in the neighborhood where we live, but there isn’t much new there and prices for old properties are sometimes crazy...
So we have now come across a new townhouse development, which will probably be the last new one here, as the neighborhood will then be “full.”

It is offered directly by the developer and costs 194,500.00 EUR + carport 10,500.00 EUR.

Included is also:
- Terrace divider and garden house
- Modern bathroom with branded sanitary ware
- Tiling in bathroom, kitchen, guest toilet, and hallway
- Fixed price – guaranteed completion date

That sounds pretty good and manageable to us for now...
Of course, other floor coverings, “wall paintings,” mailbox, lamps, etc. will still have to be added...
and from the “mandatory costs” also notary, new insurances, etc...

So we are now considering whether we can really afford it.
I am thinking of a repayment of 1000 euros per month.

Can you tell me from experience and also give tips whether this is possible or if we are taking on too much?

Do you have any other tips on what we should consider, can you “trust” the price from the developer?! Unfortunately, we are still inexperienced in this matter :-/

Many thanks and best regards!

Hi,

if it comes from the BT, the real estate transfer tax is at least €6,800, depending on the federal state even €9,700. You haven’t mentioned that so far, I don’t know if you have it in mind.

Wall and floor coverings ~€5,000.

And with the €194,500, a few tens of thousands can very quickly be added.

What about the other outdoor facilities?

This is not meant to sound harsh, but if you have already worked for 3 years, you could have saved something by now.

Regarding the installment: Let’s calculate with €225,000 (purchase price, notary, tax, floor and wall coverings), at 4% interest you would be done with a €1,000 installment only after 36 years. Well, without special repayments and upward adjustment of repayment. With a 25-year interest rate lock, you would still owe almost €100,000, the interest then uncertain. For every 2% more interest, you can add about €160 to the installment.

With full financing, I would also recommend full repayment by the end of the interest rate lock. For you, still assuming 4% interest, that would be a €1,200 installment over 25 years.

I wouldn’t reject full financing outright, but you have to be able to afford the installment. And it should not be too low... and also think about children in a few years if one income disappears.

Oh, so this is not a full (=100%) financing, but according to my calculation a 116% financing. You first have to find a bank that agrees to that.

So maybe better save a bit more, since you apparently can put quite a bit aside after all.

Oh, besides the loan installment, additional costs will also be incurred, which will certainly be significantly higher than your current ones.

When I read your post earlier, I first had to turn off the box

also the interest rates are quite low right now so we think this is a good opportunity!

..is the worst reason to build!

In our neighborhood where we live, we always wanted to stay...

That's what you say now. But maybe everything will turn out differently than you think.

At least after training it should be that you see yourself somewhere else, get out, live, take vacations, finally become independent. Being in love makes you want to settle down, but everything can change so quickly. And if not by your own actions, you might be forced to change. A permanent contract does not mean unbreakable. Don't you want to test your market value on the job market after your training? A property makes you immobile! High repayments tie you to the house, there is hardly any time, leisure, or money for going out. And if you are not planning a child now, it can look very different in a few years, then one salary might be lost.

Aside from that, as a career starter you can hardly get a loan for a property.

Enough of the not-so-positive words - I only mean well before you get stuck in something you can't yet see through. I assume you are around 20+ years old

The statement fixed price should be treated with caution. Sounds good, but it is important to check what is included in their fixed price. This varies from provider to provider. If the provider does not mention in the contract that the scaffolding is included in the price, they can still charge for it afterwards.

Without rent, you are spending €1400.. that is not exactly little. If you plan to buy or build something, you will probably have to cut back significantly here.

€3800 net is a good amount, and something can definitely be realized with it. But you should keep in mind that low equity capital always means high costs. Then the interest advantage quickly fades. And you only get the interest rates on the posters if you bring 40% equity capital.

Hello,
first of all, thanks for the answers!

We have an appointment at the bank tomorrow, let's see!
We would be at 210,000 with the house, plot + carport, which must be included.
There are 5,000€ saved, but does it help to mention that to the bank?
Depending on when the completion is, we would manage to save quite a bit more by then.

Here is what is included in the "notarial fixed price":
- Turnkey including finished attic, windows, heating, electrical etc., access to the attic
- Controlled residential ventilation
- Plot + access path
- All development and connection costs (electricity, water, gas, sewer)
- Architectural and engineering services as well as official fees, except real estate transfer tax, notary + court costs

So far we haven't been able to save much because I am still in training and therefore had less money, and my boyfriend has somewhat "co-financed" me. Our current expenses will also decrease since currently our car and my boyfriend’s studies are included in the 1400 €, but that will also end next year.

Otherwise, not much will change in our lifestyle. We have already lived quite well, didn't have to restrict ourselves, did a lot of what we wanted and went on vacation about three times a year.

That we will then only live for the house and restrict ourselves now is of course clear to me. But the current standard of living already fully met us and with my full-time job from June, at least 700 € net more will come in.

So, it looks to me as if everything is currently feasible.
But for me this is also not "THE investment of a lifetime", so I do not have the goal to live there for many years... and these properties are also in demand for resale in our area.

But of course I hope this is not a foolish attitude, but that's how I also saw it with my parents.