House financing via condominium ownership

@Musketier: Correct me if I’m wrong,

Unfortunately, I have to.

If the apartment, for example, costs 130,000 euros + incidental costs (roughly calculated at 10% - depends on the case) 13,000 euros = 143,000 euros for the apartment. Maybe another 10% miscellaneous = 13,000 euros, then I’m at around 156,000 euros. He has 18,000 euros equity, so 138,000 loan requirement. That makes an 88.5% financing according to me. Then the conditions look quite different again. ;-)

To stick with your example:

You yourself write the apartment costs 130K€. The incidental purchase costs (if a broker is involved, you should rather calculate with 12% instead of 10%) do not increase the value of the apartment. Also, a built-in kitchen can sometimes be co-financed, but it does not increase the value of the apartment. The same applies to pure renovation costs (painting work, flooring). A distinction must be made here between renovation and refurbishment.

If you now assume a loan requirement of 138K€, you still have a value for the apartment of 130K€ (makes 106% financing). In the worst case, the bank sets the loan-to-value at 90%. Then the value of the apartment would be 90% of 130K€ = 117K€ and you have a loan requirement of 138K€. (=118% financing)

Nonetheless: definitely get advice from an independent financial advisor!!! :-D

Possibly even several.
So far, we have had 2 talks with loan brokers and 2 talks with banks. From each conversation, we were able to take new information and can hopefully pick out the best offer. Whether it is the optimum, you only know in 10-30 years.

Best regards

Musketier

Hello everyone,

First of all, many thanks for the numerous responses, they have already helped me a lot. And great that you roughly agree with my financing, or that it is feasible.

So a monthly payment of €600 - €700 should definitely be manageable, since I already cover incidental costs and household expenses alone and still have well more than the mentioned amount left over each month. What would be added on top of that is the house levy.
What remains is that a property for €150,000 was probably a bit overestimated, as I also miscalculated the equity capital calculation :).

So I would like to take the advice about independent financial advisors, but are there any tips & tricks on how to find a competent one? Is it just a matter of getting recommendations from relatives/acquaintances??
And what costs can I roughly expect?

Furthermore, another idea came to me. I had already mentioned that I still have some money left each month + bonuses + 13th salary, etc..
Is it more sensible (after I have saved some buffer) to put all the money into the financing (special repayments), or to put part of it into an extra home savings contract to secure a low interest rate for the future home financing???

Regards

So I would like to take the tip about independent financial advisors, but are there any tips & tricks on how to find a competent one? Is it just a matter of getting recommendations from relatives/acquaintances??
And what kind of costs can I roughly expect?

No one has been able to answer that for me either. And tips from acquaintances.. Do they know their stuff? And how can you judge that? That's exactly the problem.
I’d rather know my way around myself and know what I’m getting into. Loans aren’t as hard to calculate as people think. You just have to get into it once and then find the best fitting offer yourself.

We stuck to the 2 major (Internet) loan brokers and arranged appointments on site. The brokers are not 100% independent, as they also receive commissions, but they can definitely compare a wide range of banks and insurance companies.

Since a house is probably not an option at the moment, but I still want to work toward it, the interim solution should first be a condominium that, once paid off, is to be sold and serve as seed capital for a single-family house.

This basic idea is exciting but also raises a few questions.
- In how many years should the condo be debt-free?
- What will be the value development of the condo?
- By when will the single-family house be realized?

The incidental acquisition costs when buying real estate are considerable. For example, with a total of 10% for property transfer tax, notary, court, broker, etc., and an initial repayment of 2%, it takes 5 years just to cover the ancillary costs. Until then, nothing is earned.

If the condo is to be debt-free in, e.g., 10 years, an initial repayment of around 8% is required with 4% interest and a monthly rate of 1,300 euros. For a term of 15 years, the values are 5% initial repayment, 4% interest, and a monthly rate of 960 euros. The interest is relatively high because the loan-to-value ratio is easily at 100%.

It then becomes interesting when switching from the condo to the single-family house. Before selling the condo, you first have to have bought or built the single-family house (otherwise, you would be sleeping under a bridge). For an indefinite period, there will therefore be a double burden from two properties. The creditworthiness must be sufficient at that time. This can perhaps be bridged with interim financing. Buying and selling real estate takes time. The duration and costs of interim financing are thus uncertain. And the lenders must also of course agree to all of this.

As a result, the entire planning is equipped with several variables that make a forecast impossible from today’s perspective. According to the motto: First, things turn out differently, and second, than you think.

If an owner-occupied condo is viewed as a capital formation measure, the question arises about the savings return—i.e., with what savings interest rate the payments for the condo are to be credited. In this calculation, the saved rent to a third party, value developments of real estate, maintenance measures for one’s own condo, etc., must of course also be taken into account.