Good offer for a young family? Buy yes or no

Hello forum,

my young family and I currently have the opportunity to buy a house. This is possible through connections and that’s why it’s not advertised, otherwise it would probably be gone by now.

Now I wanted to ask the experienced home buyers here if this is feasible for us.

My net salary is €3050, my wife only receives parental allowance €370, then we get €438 for our kids as child benefit 2x and an additional €250 as state parenting allowance. Thus, we have a total net income of about €4100 net. My wife will work part-time again in a year and will then earn about €700. My salary will also increase again at some point – so it will only get better.

Our jobs are independent of Corona and crises.

The house would be perfect for us, it was built in 2000, 130 sqm, 5 rooms, large basement with 60 sqm and an attic as storage space. There is also a double garage and a plot of 600 sqm. The entire house and the basement are underfloor heated.

The purchase price is €430k. We would like to renovate the bathroom and eventually the heating should also be redone. That would add another €40k and then the additional costs without broker fees.

Unfortunately, we only have €35k in equity. Until March, we would still get €40k support from the state... That should not be forgotten. I had a preliminary discussion regarding a loan and it would be possible with a monthly rate of €1350. Additional costs will of course come on top of that...

In about 20 years we will inherit a nice sum of €150k... I don’t rely on that as I want to make the financing independent, but I keep it in the back of my mind.

Now the question... is that calculated too tight? Or is it "easily" manageable? And what do you think of the price? With the living space, the basement, the plot and hardly any need for renovation in Bavaria.

Well, I think it doesn’t fit together. Apart from the fact that you say "I don’t expect that," you can read between the lines that you are indeed expecting "external" support. Then I wonder what kind of bathroom you want with a 40k renovation. In a house from 2000. So you need a total volume of a good 500k. With an income of 4100€. And equity of 35k. The equity is not even enough for the additional costs. So you will end up with a 110% financing. Even if you cut the 40k for the bathroom, it’s already tight. With additional costs and maintenance reserves, which should definitely be formed, you are at a good 1800€/month just for the house.

I am estimating 15 - 20k for the bathroom renovation. We have 2 craftsmen in the family who would do it for me like that. By the way, they are coming over today to take a look at it with me. One is a master bricklayer, the other a carpenter. The bathroom is completely usable, but it doesn't look very modern anymore...

But that's exactly why I'm asking here.

even if it would come to 1800€ per month... Then we still have at least 2300 € left to live on. That should actually be more than enough, right?

I'm just worried that I might be missing a good opportunity here. I think the price is hot, isn't it?

Hello,
this is probably going to be a very tight situation.
With your income, (the increase next year and in the future you can forget for now, it doesn’t count) it’s going to be tight.
Does the bathroom really have to be renovated?
There is already some potential to save here.

Unfortunately, we only have 35k€ in equity. By March, we would still get 40k€ support from the government... That should not be forgotten.

Why is there 40,000 €?

I had a preliminary discussion regarding a loan and it would be possible with a rate of 1350 € per month. Of course, the additional costs come on top of that...

With that amount you probably have minimal repayment, it needs to be much higher, otherwise you will never get out of it.
Regards, Olli

The bathroom... Yeah, it really looks shabby compared to the rest of the house...

There is a €10,000 construction or purchase bonus and then €15 per child for 10 years. (Baukindergeld bis 31.03.21) So basically, you get €3,000 annually, which you can put back in as a special repayment.

Yes, I know it will be tight. But I don't know if we will ever get such a chance again...

I also don't know how the real estate market will develop in the coming years... If everything keeps going up, we would never own a property...

This repayment is also a term until retirement... But yes, with the inherited money we would then pay off the rest in one go. (also ok yes I am counting on the money) The long term is to keep the monthly rate low.