House Purchase - Financing (Experience Report + Opinion)

Hi. I wanted to share my experience with our current house purchase financing. My wife and I wanted to buy a house. We have almost €130,000 in equity and were interested in a property for €500,000 (incl. [Notar], [Grunderwerbsteuer], etc.). The house was built in 1998 – last renovated somewhat in 2011 – and has almost 250 sqm of usable space, 2 garages, and a garden house, as well as 1000 sqm of land (value: €80/sqm). No renovation work is required. I earn between €3,300 - €4,500/month and my wife about €1,300/month (however, parental leave with 2nd child with about €800/month from July). Regarding financing: about a 79% financing through the equity, 10 years fixed interest, 2% repayment, [Bausparer] and [Riester], etc. are currently being paid into for some time now. What do you think, would a bank cooperate and what interest rate would they want for such financing? How about special repayments? I am very curious about your experience/opinion. I will of course share the outcome afterwards.

Hi. I would like to share my experience with our current house purchase financing. My wife and I wanted to buy a house. We have just under €130,000 in equity and were interested in a property for €500,000 (including notary, property transfer tax, etc.). The house was built in 1998 – last renovated somewhat in 2011 – and has just under 250 sqm of usable space, 2 garages, and a garden house, as well as 1000 sqm of land (value: €80/sqm). No renovation work needs to be done. I earn between €3,300 - €4,500/month and my wife about €1,300/month (however, parental leave with 2nd child with about €800/month from July). Regarding the financing: with the equity, it was about 79% financing, 10 years fixed interest rate, 2% repayment, building society savings and Riester, etc. are already being saved for some time now. What do you think, will a bank play along and what interest rate do they want for such financing? How does it look with special repayments? I am very curious about your experience/opinion. I will of course report back on the whole thing.

Is this a puzzle forum!?

One might think so. I think he wants to hear from us that this financing is bearable and then complain that the bank said: NO. So already has my answer. But I want to explain it to you: 79% of 500,000 is just under 400,000 euros = loan amount With an assumed annuity of 5% you have a monthly installment burden of 1,670 euros. For 250 sqm living space, one can estimate monthly incidentals between 350 - 400 euros. Repair reserve €1 per sqm = €250 (the house is already 17 years old) Living expenses for 2 people (650 + 250) or in the future with three people +250 makes €1,100. Not yet accounted for are cars, insurances, fixed costs (phone, electricity, TV), hobbies, possibly ongoing loans, etc. Income side: Statement 3,300 - 4,500 euros p.m. means €3,300 Wife - there are enough banks that do not consider parental allowance Previous income of the wife will cease with birth – will it be available again in this amount in the future??? So income calculation in the worst case: €3,300 Calculation: 3,300 - 1,670 - 350 - 250 - 1,100 = -70 euros p.m. – and the above-mentioned costs have not even been considered yet. Maybe I was a bit generous with the incidentals + reserve, but this should make the (likely) refusal of the bank clearer to you. Of course, you can enter another financing discussion stating that you earn €4,500 p.m. – but does it help to lie to yourself? In the end (if you cannot pay) you guys are the ones who get the short end of the stick. By the way, €80 / sqm in M’berg is cheap. I was once told years ago that you have to pay at least 120 (sometimes even more) there. In recent years, prices in L.E. have also shot up.

Hi. I already know that this is not a puzzle forum. We received an approval from the bank in mid-April. So €500,000 costs - €125,000 equity. We then got €375,000 with 1.06% interest and 10% special repayment. We were just very surprised that you can get a loan for such an amount at almost under 1% interest. Regarding the other costs: no ongoing loans, 2 like-new, paid-off cars. Regarding the square meter price: that is according to the land value table from 2013.

Loan term?

Duration of the loan?

10 years

Why do I simply not want to believe the 10 years "Laufzeit des Kredits"? Do you mean the fixed interest period? From the monthly income, the special repayments will not be feasible unless there are significant additional sources of money. Also, the income is not high enough for the repayment rate to be so high that the term would suffice.

There is really still information missing so that everyone here becomes jealous (well, I already am, just based on the interest rate). However, my envy diminishes when I imagine a (moderate) interest rate increase to the market level in 10 years and then roughly calculate how much of the remaining debt would still be left.

Hallelujah, I hope it turns out differently.