House Purchase - Financing and Valuation - Berlin Area

Thank you very much for your experience and advice!

We are currently aware that in the next 1-2 years the belt will be tightened. After that, another income will certainly come in and the situation will relax a bit. We still have a small parachute on our back for the worst case! But we will leave that aside for now. If you say: Yes, this is feasible and with a second income it will be easier -> then I am reassured.

We want a house because we have had a community garden with 450 sqm for several years and we like it and it is so good for the children that we decided against a condominium. Doing small repairs here and there would not be a problem for us. We have gained some experience with that, but of course a house is something else and many things are beyond the capabilities of a DIYer. We just hope that it will be manageable with the property.

Regarding the price: So the valuation of the property was carried out by the advisor after the financing discussion as an addition (so it is not an appraisal from the bank in that sense). The key data and renovation history were entered and the computer then spits out the corresponding value. The advisor said that the house is valued quite low because it is only in a medium condition and some renovations are still missing (facade insulation, heating) or the other renovations are several years old. Probably the land value is taken and the house is then added accordingly. I have now looked at some offers on the portals and a house in need of renovation would still cost about 250-300K if you subtract the land value from the purchase price. I am slowly starting to believe that the estimated value is comparable to those in forced auctions. Otherwise, the valuations from the bank and the market values tell completely different stories.

Conclusion: We will proceed with the property and hope that everything works out.

Further questions:

1. If the contract is prepared by a notary, can we assume that everything is sufficiently checked by the notary and we do not expect trouble afterwards? Or could someone get in touch in 1-2 years and say: Sorry, but I own 50% of the land and so on?

2. The bank recommends taking out additional insurance to secure the family :) e.g. disability/ income loss insurance... <- What are your experiences here? Is it worth it?

Best regards!

If you say: Yes, that is feasible and with a second income it will be more relaxed -> then I am relieved.

The answers are not as clear-cut as you seem to read them.

The advisor said that the house is rated quite low because it is only in average condition and some renovations are still missing (facade insulation, heating) or the other renovations are already several years old. W

I would add at least 100,000 for the renovation.

2. The bank recommends taking out additional insurances to secure the family :) So disability insurance/ income loss insurance... <- What are your experiences with these? Are they worth it?

You should insure your death as the sole earner with a risk insurance so that your family at least does not lose their home.

1. If the contract is prepared by a notary, we can assume that everything has been sufficiently reviewed by the notary and we should not expect any trouble afterwards. Or could someone come forward in 1-2 years and say: Well, sorry, but I own 50% of the property and so on?

Best regards!

Yes, you can count on that. The notary takes a look at the land register. All owners are listed there. The notary points out any potential problems.

Thank you very much for your experience and advice! We are currently aware that the belt will be tightened in the next 1-2 years. Afterwards, certainly another income will come in and the situation will relax a bit. We still have a small parachute on our back for the worst case! But we will leave that aside for now. If you say: Yes, it is doable and with a second income it will be easier -> then I am reassured. We want a house because we have had a garden allotment of 450 sqm for several years and we like it and it is good for the children, so we decide against a condominium. Doing small repairs here and there would be no problem for us. We have gained some experience there, but clearly a house is a different matter and many things are beyond the scope of a DIYer. We just hope that the object’s condition stays within limits. Regarding the price: So the valuation of the property was done by the advisor as an addition after the financing discussion (so it is not an appraisal from the bank in that sense). The key data and renovation history were entered and the computer spits out the corresponding value. The advisor said that the house is rated quite low because it is only in average condition and some renovations are still missing (facade insulation, heating) or other renovations are already some years old. Probably the land reference value is taken and the house is added accordingly. I have now looked at some offers on the portals and a renovation-needed house would still cost about 250-300K if you subtract the land value from the purchase price. I slowly believe that the estimated value is comparable to those in forced sales. Otherwise, the estimates from the bank and the market values tell very different stories. Conclusion: We will proceed with the property and hope that everything works out. Further questions: 1. When the contract is prepared by the notary, can we assume that everything is sufficiently checked by the notary and we do not expect any trouble afterwards? Or can someone contact us in 1-2 years and say: Sorry, but I own 50% of the property and so on? 2. The bank recommends taking out additional insurance to protect the family :) So disability income/ loss of earnings insurances ... <- What are your experiences with these? Are they worth it? Best regards!

Whether it is worth it you know when the event of claim occurs! At least term life insurance costs nothing

So 15k for the electrical system, 15k for the heating, and for 25-30k you can insulate the facade. I would have the electrical system checked to see if it is up to date and then have it renovated/expanded. Keep the money for the heating in reserve, the facade can probably wait. That will just mean higher heating costs. Regarding insurance: yes, in my opinion, in a situation like this you should secure your ability to work. This includes life and the ability to work in the narrower sense. So risk life and disability insurance are definitely mandatory for me personally. As for the actual topic, I say: go for it. The equity is there, you live modestly and you will manage until the second income comes in.

2. The bank recommends taking out additional insurance to protect the family :) So occupational disability/ loss of earnings insurance... <- What are your experiences with these? Are they worth it?

It depends. Definitely do not take out a credit default insurance or similar through the bank, it's pure rip-off. You should have occupational disability insurance, but then separately through a specialized broker.