Home financing feasible or pipe dream?

Hello everyone,

At the moment, my partner and I still live separately. However, we plan to move in together in 2016. My girlfriend always dreams of a house with a garden, while I am somewhat skeptical about this due to the financing.

The key data:

SHE: 31 years old, upper secondary school teacher, employed in Berlin, salary approx. €58,000 gross/year (approx. €2,800 net/month), employed for 2.5 years

HE: 31 years old, employee, permanent contract, salary approx. €44,000 gross/year (approx. €2,200 net/month), employed for 3.5 years

Net income per month around €5,000

Savings:

SHE: approx. €20,000 in a daily allowance account

As retirement provision, SHE has a Riester contract, nothing else.

HE: €12,000 in a daily allowance account, approx. €10,000 in stocks, ETFs (should be sold step by step with a profit, which is somewhat difficult due to the current stock market situation).

Additionally, precious metals with a current market value of approx. €5,000.

For retirement provision, a unit-linked life insurance since 2004 with €50 monthly (value approx. €6,300). Then €50 monthly into the flexible pension plan of CosmosDirekt (current value approx. €1,700) and another €50 monthly into the flexible pension plan investment of CosmosDirekt (value only €100 so far). In total, €150/month reserved for retirement savings.

Current rent costs:

SHE: flat rate €750 (lives in an ancillary apartment in the parental house)

HE: €589 warm (€440 cold)

Current saving rate:

SHE: approx. €750/month

HE: the reserved €150/month for retirement provision, €150/month for vacation or expensive purchases, and €300/month into the daily allowance account. Fixed savings therefore at least €450/month.

My partner says that if we both cannot afford a house with land with our salaries, how can all the others do it? I see the key point in the equity. Currently, we both live quite well and together have a saving performance of €1,200/month, so we could increase our equity by €15,000 within a year. If one restricts oneself here and there, probably another €100 per month per person is possible.

Another sticking point is that not all areas in Berlin come into question for my partner because she is relatively location-bound due to her school and sometimes only has to be at school for 2 hours and therefore does not want a commute longer than 30 minutes; I do not need to mention the constant traffic jams in Berlin. Thus, we would be somewhat restricted there. The school is located in Berlin Tegel, if anyone knows it.

Desire for children: preferably 2 children. Partner wants to take parental leave each time and then work less, about 75% position, which should also be considered for a potential loan.

A car (2 years old) is available and belongs to my girlfriend. I get an ABC ticket for Berlin public transport for €200/year.

How do you see this? Bury the dream of a house and rather move into a 4-room apartment to have enough space immediately for a study and child 1, or dare the project with our monthly saving rate?

With great difficulty, we would have saved another €15,000 by September 2016 and then, with her €20,000 and my €12,000, which I have in the daily allowance account, a total of €47,000, and if you include the stocks (which are somewhat uncertain), it would be approx. €57,000. This would just cover the high ancillary purchase costs in Berlin. My parents could lend me €10,000.

€57,000. That would just barely cover these additional purchase costs given the high ancillary purchase costs in Berlin.

It is always shocking to me that this is exactly the case. Well ... For a detached single-family house, you roughly need €400,000 to €500,000 in external capital. IMHO you should aim lower (terraced house ...). In my opinion, your incomes are not high enough today (for such a large loan) and, considering family planning, not sustainably high enough, and given the employment situations, I also have little imagination regarding salary increases.

As retirement provision, SHE owns a Riester contract, nothing else.

If you mean that literally, you are mistaken. Anyone who believes in Riester should also believe in the state pension (or civil service pension, depending on the case, your wife is probably an employee) and should not neglect it. So you are better off than you think.

The trolls are out again... from all sides (both the OP and Bieber ) 5.5% annuity with a 2500 payment is 540k€ - all great. If the money isn’t enough, you eat a bit more toast.

Hello, why is my inquiry being called trolling? I tried to list all the data that I consider necessary without sugarcoating any monetary values. I have also kept a spreadsheet for 2 years where I have precisely calculated what my "mandatory expenses" are monthly and how much I can spend on consumption. After that, I then set my savings rate. Since my studies as a geoscientist were very costly (excursions, etc.), I was only really able to start saving properly since 2012, which is why not much has accumulated so far. By "only Riester," I meant that she otherwise does not provide for herself privately. I am well aware of the statutory pension, but I did not include it because I only wanted to show how much of the monthly income is still invested in private retirement provision. Unfortunately, the land prices in Berlin are relatively high for me personally, around 250-350 €/sqm in the area where my girlfriend lives. That already amounts to an average of €120,000 for a 400sqm plot :-( And yes, as a teacher, you only get salary increases if a new collective agreement is concluded or if you become a department head, etc. Since I myself work for a state-owned company (DB), the increases are also moderate. The next salary level is in 1.5 years, and then I would be at €48,000 instead of €44,000, but you should always calculate with what you currently have available, so potential future salaries are a matter of speculation for me.

Please think about how you see your lifestyle in the future. With €5,000 net per month, a savings rate of €2,000 should easily be feasible. That means if you live together and continue to consider the salaries, you can comfortably finance half a million ... but only if you don't live as extravagantly as before (no offense intended)

Thank you for the response. As I said, I created a table for myself with income and expenses. With a net income of €2200, I have fixed monthly expenses like rent, electricity, phone, insurance pro-rated 1/12 of around €750. I save €600/month in various forms as already described. That leaves €830 for monthly personal expenses. So far, the year 2015 has been a bit expensive for me because, due to the job, I needed a few "meeting-appropriate" clothing items and yes, this year there was 1 week of winter vacation, 1 week of Transalp with the road bike, and 2 weeks of summer vacation. I have to rethink and maybe skip one vacation of this kind. All the trips together cost a total of €2500, if that is enough. I will "push" my girlfriend to also create such a table so that we can precisely see how variable her savings rates are or in which months there were high special expenses.