Home financing ever possible? Probably not!

I have not read the entire thread but I cannot understand it at all. I think the problem for most people is that they do not trust themselves, always want to play it safe with everything, hardly want to put in any effort themselves, do not want to take any risks, and want to move in within a year.

When I was 40 years old, I had 150k in equity and inherited a building plot in the outskirts of a big city. I earn 2300 net and financed the house construction alone without my partner. I am a craftsman and did almost everything myself except for roofing and window installation and managed with a 100k loan to build a two-story 192 square meter villa.

Trust yourself and take the opportunities that come your way in life.

For 10 years he has been telling customers that, aha. 10 years ago, interest rates were still at 3.5-4% for a 15-year fixed interest period. I financed at 0.9% two years ago.

30 years? That didn’t exist below 1.7% if any bank would have done it at all.

That means with my loan amount and the same rate, 71,000 EUR interest after 15 years at 1.7% compared to 35,000 EUR at 0.9%. 2,400 EUR/year that I can either spend more or put into extra repayments...

Where will the interest rate be in 10 years? No idea. Maybe at 8%, but maybe also back at 1%. The next financial crisis has long been in sight.

Our advisor has now been with the bank for 45 years. And yes – from his point of view, loan interest rates have been historically low since 2010. At the end, just above zero, some KfW products with subsidies even in the negative range.

And there are plenty of banks that have always financed for 30 years as well. Hypo Bank even did that in the mid-1970s.

I’m happy for you if you are satisfied with your financing. We simply wanted maximum fixed interest period and that was available back then at 1.45% for 30 years. With a shorter fixed interest period we could have saved a few tenths and maybe finished earlier.

But honestly: we are now paying 800 euros every month for our flat for another 27 years and in the meantime don’t have to worry at all about whether the rate will rise or not. With the current inflation and salary developments the flat basically pays for itself. What real value will these 800 euros probably have in 20 years?

We prefer to invest our surpluses in investments that yield more than this 1.45%. That brings more.

I can’t listen to this stupid argument anymore that supposedly it’s so much better to go into debt with 400k to build a house and then still pay rent in retirement.

Isn’t the point of building a house to NOT have to pay rent in retirement?

Everyone is free to do it how they want. For the interest I would pay on a loan, we can cover 11 years of cold rent (900)!!!!

And after 11 years your rent suddenly becomes free?

And on top of that enjoy life to some extent.

I claim you can do that both in your own home and in a rental apartment.

Inflation is all well and good, but if I have a pile of debt at the bank, the money becomes less valuable and interest rates remain the same, am I not better off without debt?

Uh, no. Your debts are also devalued. Loss of purchasing power mainly hits savers negatively – you can buy less with your saved money. If your debts are worth less, that’s good for you. Salaries are usually adjusted over time for inflation, but your debt amount is not.

The house doesn’t belong to you anyway until 30 years later. Until then the bank has the house and my interest – bad deal.

You read this here often, but it’s basically nonsense. You have a legally binding contract with the bank. As long as you stick to the agreements and meet your obligations at all times, the bank can’t do anything to you initially. It’s your house. Foreclosures don’t happen because banks are nasty final bosses, but because people fail to meet their contractual obligations.

And for what? So that when I’m old I can say: That belongs to me.

You can already say “that belongs to me” beforehand. For example, no landlord can simply kick you out if you are 65, have lived there for 20 years, and maybe don’t want to move at all anymore.

And when I go to the grave, what have I then given up my whole life for, paid interest to the banks and had sleepless nights?

Why are you having sleepless nights? Lifelong sacrifice is always what you make of it. You should calculate financing in a way that you can still live comfortably with it. There are various adjustment screws, not least the property itself and what it costs. The interest paid to the bank is of course gone, but that’s also your rent payment at the end of your life.

So that I can then leave it to ungrateful offspring if there is any, who usually don’t want it anyway because it’s outdated and possibly still in debt?

Being indebted or debt-free shouldn’t be viewed in black and white. Even if there is a residual debt, usually you still have capital build-up, because the property at that time is normally worth more than the residual debt. If you then sell the pile of bricks, surprise – you have the surplus as money in the bank.

There is no ownership in this case, you enslave yourself and get on a hamster wheel. It baffles me how some people can be so set on this even though they can’t afford it. It’s almost like idiocy. Life isn’t just about having and possessing.

Nah, for some it apparently consists of paying rent. :D Honestly, I don’t see the big advantage there either.

As said. Whoever thinks they cannot enjoy their life in Germany with a net income of 5,200 should look abroad.
In Hong Kong or Shanghai, the price per m² is so high that families live in 30 or 40 m², singles sometimes even in 15 m².

By the way, it’s no different when looking back to the good old days. My parents grew up in 100 m² houses. Four people or six in my father’s case, where besides the three children, the grandmother also lived there.
Today, however, a 100 m² bungalow is almost considered a doghouse for a couple without children.

And back then, the houses were not handed over turnkey by the general contractor, with painters, kitchen studios, floor layers, decorators, furniture assemblers expanding them, etc.
After work, people pitched in themselves, starting from the excavation of the construction pit.

But it couldn't have been any other way, at the end of the 40s/beginning of the 50s. The country was largely in ruins, and whoever wanted a roof over their head had to build one themselves.

Currently, it is simply the case that with the interest rates, you cannot easily finance a loan of €500,000 with an average income. With the earlier interest rates, this was not such a problem. €5,200 net does not sound bad at first. But with 2 people working full-time, that is probably only €50,000 gross annual income per person. Many earn less, but with the current interest rates and prices, that is still too little. Especially with regard to the currently high inflation.

With an annual gross income of 50,000 EUR, you belong to the top 25% of all income taxpayers in Germany. With an annual gross income of 70,000 EUR, you already belong to the top 10%, but 100,000 EUR to the top 5%. Figures from 2018. This may have shifted a bit upwards in parallel, maybe now the top 25% start at 55,000 EUR, etc. But in principle, it is correct.

This may not fit with one's own perception, but these are data from the Federal Statistical Office.

If a couple has no children and both belong to the top 25%, then together they are even significantly higher, thus certainly within the top 10%...

Because although my gross income is below the top 10%... I can't spend the money just for myself, my wife and 2 children also want a share of it. This leads to the situation that you earn well, but don't feel particularly wealthy.

What I find rather hard to understand with 2 people and 5,200 EUR net income, however. Even if 2,000 EUR go towards rent and fixed costs, there are still 3,200 EUR left every month to squander... 3,200 EUR, on which 4-person families live in our country...