House purchase and house construction - What can we afford

Good day everyone,

my better half and I want to slowly start the house building/purchasing process over the next year. Unfortunately, we are already struggling with one of the quite initial questions: What can we actually afford - I _think_ we are in a very luxurious situation regarding capital/income, but with all the calculators our case somehow is no longer properly captured.

We currently have no children, but they are planned after the nest-building phase is completed.

Income:
Both of us earn (I am 35, she is 33) quite well, my girlfriend earns a bit more than I do, so we come to a "secure" income of about €8,000 net per month (bonus payments etc. would probably add another almost €1,000 per month) - it is expected that this will initially decrease significantly during the time of having children, but only temporarily. We can both work full-time from home / and currently do so.
Our monthly savings rate (including bonus payments) is currently about €5,000 (conservatively calculated, more likely more).

Capital/Equity:
Things look pretty good on my side (fully paid-off condominium in a large city in southern Germany, valued at around €450-500,000 (but I do not want to sell it - emotional reasons), which could currently be rented out for about €1,000 (... also conservatively calculated).
Additionally, I have a stock portfolio with about €250,000 and about €100,000 in a daily money account. She also has about €150,000.
Furthermore, I am registered as the (sole) remainderman for my parents' house (but I do not consider this part of my assets).
We currently live together there (house fees about €500 per month).

In large parts of Germany, this situation would probably mean "go for it." However, here in the region (in the city) you hardly get any properties for less than €1.1 million / in the surrounding area it is still €750,000 - €900,000.

Therefore, the question for both of us is first: What can we realistically afford?

We want to prepare ourselves first before approaching one of the mortgage lenders next year / we also expect that we will need quite a long time to find a suitable property.

Best regards and many thanks in advance for your suggestions!

500,000 EUR equity, 8,000 EUR net income. Where does your uncertainty come from that you couldn't afford a house for 900,000 EUR? Just waste the paid-off apartment? Then you wouldn't need a loan at all? At 4% interest, that would be an absolute dream...

I wouldn't wait too long with family planning. By the time the new building is ready, it will quickly be 2025 or 2026... and unfortunately, it's not like in your mid/late 30s where it still works with the motto "We'll stop the pill now and two weeks later it's already happening." You wouldn't be the first for whom it simply no longer works at the "perfect time."

Your equity summarized:
Depot and cash = 500k
Property = 500k
fixed household net income = 8k + plus rental income?

Personally, I see few problems with the €1.1 million property - if your dream property is included.

we also assume that it will take us quite a long time to find a suitable property.

Then I would start searching immediately, @11 has concrete search tips outside of immoscout

It looks pretty good for me here (Paid-off condominium in a large city in southern Germany, value close to 450-500,000€ (but I don’t want to sell it – emotional reasons), which could currently probably be rented out for about 1000€ (... also conservatively calculated).

Emotionality aside, have you ever calculated what return you make with the apartment at 1000€ monthly rent? And what the interest for the higher loan costs you if you keep the apartment? You would have to increase the rent more than just a little for it to work out.

500,000 EUR equity, 8,000 EUR net income. Where does your uncertainty come from that you couldn’t afford a house for 900,000 EUR? Just squander the paid-off apartment? Then you wouldn’t even need a loan? At 4% interest that would be the absolute dream...

I wouldn’t wait too long with planning kids. By the time the new building is ready, it will quickly be 2025 or 2026... and unfortunately, it’s not like in your mid/late 30s it still works with the motto “we stop taking the pill now and two weeks later it’s already time.” You wouldn’t be the first for whom it simply stops working at the “perfect time.”

I think it comes from the fact that we both worked our way up a bit from "nothing" and we both come from... let’s put it this way: simple circumstances (the “only” thing to inherit is my parents’ house – although I have strongly supported my mother in recent years so that thing is paid off). We both started with a significant deficit after university. I think there is a strong mismatch between our perceived and our real reality.

Your equity summarized: Portfolio and cash = 500k Property = 500k fixed household net income = 8k + rent income on top?

Personally, I see few problems with the 1.1 million € property – if your dream property is among them.

That fits pretty well. Only the fixed household net income will temporarily be lower in the foreseeable future (that’s the big point for me) – it certainly won’t be 2 years of parental leave – but whether both of us can immediately go back to full-time work with the child is still an open question (-> even though we have the best possible conditions with 100% remote ourselves and her 100% secure job in the corporation).

For @11 there are concrete search tips outside of Immoscout

Thanks, but what is meant by @11?

Emotions aside, have you ever calculated what return you make with the apartment at 1000€ monthly rent? And what the interest cost for the higher loan would be if you keep the apartment? You would have to increase the rent more than just a little for it to work out.

Unfortunately I am aware of that, it was just basically my “first” milestone – completely earned from my own money (see point 1). Rationally, I have to agree with you more than significantly. Rent would certainly be well > 1000 (currently, if I look at neighboring apartments, I would realistically think more like 1500 + if rented furnished rather 2000). But yes, maybe I need to reflect on that again in the coming months.