Hello forum,
a lot has happened here. I will give feedback on the specific questions and comments directed at me.
Interesting post, I see many parallels with our framework conditions (income, expenses, property, construction costs, etc.) and perspectives (income increase only as inflation adjustment, career almost considered "finished," etc.). We were just lucky to lock in a 1.3% interest rate and therefore pay significantly less in monthly installments, which leads to a higher savings rate.
I think financially, this is very doable for you. You have your expenses perfectly under control and in an emergency, you can surely still adjust something if priorities shift.
Personally, I would always tend toward a detached single-family home if one can afford it, and this is obviously the case with you.
What I am still curious about is whether the €350,000 equity currently yields no return? You said most of it is available on short notice. Hypothetically, if I were to convert €300k into a daily allowance account at 3.3%, that would be €825 before taxes per month. So about €600/month "net." Accordingly, your current savings rate (or income side) should be higher than you stated. This, of course, disappears once you tap into your equity for the land purchase.
You currently rent and therefore practically don't have to build maintenance reserves, as the landlord pays these via the non-allocable house money. Feel free to factor in €250-300 per month. Ten years go by very fast, and the first paint job plus a few new interior doors or similar will be due. We have kids of similar age, the wear and tear on/in the house is enormous, and cosmetic repairs are needed relatively early. The property is probably still too young to live down, and you simply do it because you want to have it nice.
We even put aside €500 per month, but that also covers installations like a water softener, ventilation system, solar components, and heating components. If, for example, the softener becomes irreparable after five years, the €3,000 for a replacement doesn’t leave a hole in the budget. Or the aforementioned repainting.
In my opinion, many people forget or actively suppress this reserve and then break down in tears when the heat pump suddenly costs €20k after 15 years.
You have kept a household book for a while now which reflects your previous experiences and expenses. Do it hypothetically for the case you live in a single-family house, childcare costs a bit more again, or kids go to school and demands increase a little (and therefore costs). See if your finances withstand this "parallel shift," or rather the "stress test" of the maximum possible expenses. If necessary, you can reduce the repayment to 2%, and if the year goes better than expected, use the option of special repayments.
Thanks for the helpful food for thought. We still kick ourselves black and blue that we left some construction options during the low-interest phase unused because they didn’t fit us 100%. Had we done that, we could now easily plan long-distance trips and repay the loan quickly at interest rates around ~1.0%. Well, coulda, woulda.
We also clearly tend toward a detached single-family home, but for cost reasons would consider a semi-detached house. Especially since buying a city plot without a predetermined construction company offers a lot of potential for trouble in joint planning and possible execution with an unknown party.
Regarding equity: correct, most of our equity is in daily allowance or short-term fixed deposits and yields respective returns. This return is completely omitted in the calculation in the first post since these earnings would cease after the house purchase. Currently, I honestly don’t track capital gains in detail—they simply steadily increase equity.
We will factor in reserves for maintenance, I still have to check the amount.
I find that fits without any problem.
But one thing caught my eye in your statement:
€2994 per year (!) for holiday trips wtf? Is that realistic?
We spend about 15k, and long-distance trips aren’t even included.
Actually, €~3k per year for trips is realistic at the moment. We did extensive long-distance trips "before the kids" and have had no need in recent years with small children. Instead, usually one week per year goes to the Dutch North Sea and often a few days on a farm, Center Parcs, or similar.
Basically, you make a good point. When you look at what a flight trip with children (and in the future also in the school holidays) costs, it's quite astounding. At least for us, who are not used to that yet. We are aware that we have to restrict ourselves with house financing when it comes to traveling. Big trips like the USA or Asia won’t be doable, and package tours to the south will not be a frequent thing either.
You will probably be advised to take out risk insurance, which I also consider sensible. It covers the financing in the worst case so highly that the lower-earning partner is secured.
There are also the bonuses, which are quite high and flow regularly. Even though they are not counted towards financing, something comes in annually. Since the household account book was kept very well, I see no big problem.
PS. A holiday trip for an AI family of 10 days in Greece or Spain costs a fraction of €15,000. That also includes a zoo visit and some days at the Baltic Sea for the same money ; )
We already have corresponding risk insurances (term life insurance as well as disability insurance) for each other.
Bonus is—as mentioned—not contractually guaranteed but depends purely on the company’s economic success in my case. Realistically, it is the aforementioned range between €3,000 and €10,000 net annually.