House buying - No idea what one can afford

Hello,

we want to buy our own house in the next months/years and still don't really have a plan about what range is possible financing-wise. I understand that every individual case has to be evaluated differently and, of course, with an advisor... but then it also has to be about the specific house and its appraisal etc...

For now, I'm only interested in the very rough idea, especially because there is no equity. We are not naive and are naturally considering whether the risk is acceptable etc.. and it's also not because of the interest rates, since I also understand that house prices have adjusted and you can't afford full financing at a currently low interest rate anyway.

I don't know if you can generally get information from a bank without having a specific property?

Framework conditions: M 34 years old, W 33 years old, one child 2 years old. Monthly net income between 5,000 and 6,000 euros. Currently renting a warm apartment for 1,200 euros. No equity, even have a few smaller loans still open that will be paid off in 2-3 years at the latest. Total outstanding amount about 10k. (I have provisions for retirement for several years, but I guess that is not considered anymore, right?)

One car leased, the other a company car.. monthly fixed costs without groceries etc.... about 2,500 euros... if we live normally, currently about 1,000 - 1,500 remain per month, prospectively more once the loans are gone.

We want 1-2 more children, so one income will naturally drop out during parental leave. In the long term, however, we both want to work full time. Salaries are quite similar.

So not the best conditions with negative equity, but the income is not the worst. What I absolutely DO NOT know: Should you plan for a very low interest rate for 10 years, for example, and generally expect that after 25, 30 years a balance might still be open (the house will then be worth more than the remaining balance) or should you always calculate to have it fully paid off by retirement, which in our case is about 30 years?

We only want a house NOW because we now have a small child/children, are in the prime of life, and also because we pay a lot for rent anyway and are already in our mid-30s and want to be done at some point.

I don’t know whether the total loan amount for us is realistically around 200-300k from banks or even around 400k?

I don't know this forum yet, I hope it's okay to post all this here etc...

Thank you in advance!

If you assume that you could then pay 2000 EUR monthly (saved rent plus free volume), 400k would be within reach.

At the current interest rate level, it is of course better to finance longer rather than shorter.

However, it would be problematic for you if a divorce occurs; then you are financially ruined and go bankrupt as the borrower. I wouldn't put myself through that; first save away 20 percent equity with your wife.

If it works out, great; if not ... to be expected!

You should really figure out what you are actually spending, because 0 equity means 120% financing. Most banks already don’t like 100%. On the other hand, you say that if you live normally, 1-1.5k is left over. And with the RS there are still 10k outstanding, but those won’t be gone for another 2-3 years. That should be done with your means within 10 months. Then the asset balance wouldn’t be so strongly negative anymore. A negative asset balance is often a knockout criterion; especially if it’s not backed by any asset (I’m guessing student loans and/or small/consumer loans). Your house bank is always open for a first conversation. With brokers you might get an offer, but it’s rather poor due to the fact that a subordinated loan is necessary. Then for the blended interest rate you easily have a 3.x% for 15 years on the table. Conclusion: be honest with each other about the monthly expenses. And try to repay the old debts as quickly as possible.

I see a over 100% financing less as a problem, rather the fact that with these income conditions no equity has yet remained or even debts are present. We currently have an income of €4500 and are currently saving over €3000 per month.

Monthly net income between 5,000 and 6,000 euros. Currently rented apartment warm 1,200 euros. [...] monthly fixed costs excluding food etc.... about 2,500 euros... if we live normally, currently about 1,000 - 1,500 left per month

Keep a household budget, find out where the money disappears, check how important the desire for a house is to you. Then pay off the debts as quickly as possible and save on ancillary costs so that you only have to talk about "just" over 100% financing (better something below 100).

Hello, even if you assume 5k net and 1,200 warm, it is beyond me how one can have no equity but still have debts. At least the car is a company car. With a 300-400k loan, you should question whether you can manage on your own. That means house is there, burden, additional costs, purchases. That is not 1,200 warm. And you also have to build reserves. Are you willing to make sacrifices? Then 2-3 vacations will be tight.

A company pension plan also sounds like little. We have 2 * BVV, Riester, BU, and risk life insurance. You want to insure against death and accident. That takes many euros away.