House purchase - Financing possible?

Hello everyone,

We have found a suitable house for us but we do not know if we can afford it with the current interest rates etc. It is an end-terrace house and is supposed to cost €350,000. (Private sale without broker)

General information about us:

[*]Who are you? M + F
[*]How old are you? 34+30
[*]Are there children? 1 (almost 3 years old)
[*]Another child planned in 1-2 years
[*]How many hours do you work? 40 / 20

Income and asset situation:

[*]What income do you have? M: €3000 at DB AG and F: €1200 attached to public service
[*]How much equity do you have? €35k
[*]Child benefit (monthly) from Germany €250
[*]Total monthly income: €4450

Housing/living costs and mobility costs:

[*]Warm rent €1200
[*]Fuel €200
[*]Electricity €75
[*]Internet €40
[*]Mobile/Digital subscriptions €65
[*]Groceries €400
[*]GEZ €18.36
[*]Insurances €250
[*]Daycare €200
[*]Total monthly expenses approx. €2450

General information about the property/land:

[*]How big is the plot? 420m2.
[*]Plot in NRW (Rhein-Kreis Neuss)
[*]End-terrace house built in 2002 (110sqm)

What is your assessment? Do we have a chance to get such a loan?
We want to contact banks soon and get advice. In the meantime, we would like to read your opinions here.

Thank you and best regards.

Do you keep a household budget book? 400 EUR for food per month? That is below the amount you would have as a 3-person family on [Bürgergeld]. I don't believe that. Clothing for you and especially your 3-year-old? For the next child, also remember that the idea of having younger siblings wear the clothes of the older ones only works if they are 2 boys or 2 girls. With "mixed" siblings, this definitely no longer works from the age of 3... Or the other way around. If you really had 2,000 EUR left over monthly and you have wanted to own a home for a long time... why do you only have 35,000 EUR in equity? Your equity is enough for the additional costs, a bit of new paint on the walls, new floors, some decoration. Even a new kitchen would not be affordable. We also took out a 350,000 EUR loan, but still at 1%, and have about 5,500 EUR net on average (variable income through field sales), installment 1,250 EUR/month. I wouldn't trust myself with a 2,000 EUR installment, but that is what lies ahead for you...

Mathematically feasible with a rate of €1,500 per month = comparable cold rent. That is about 1/3 of your household income. However, since this is a 100% financing (your equity goes towards the ancillary costs), not every bank will do this anymore.

Go to a broker and get advice on possible bank partners in this regard. It will be a bit tight when the second child arrives and she possibly stays at home.

I would not trust myself with a €2,000 rate,

€2,000 rate is almost 7% annuity. It is absolutely not necessary to repay that high at the age of both of you. Is there a reason why you are calculating with around 3.5 (or even more) repayment and thus a 20-year term?

Basically certainly feasible, albeit tight. The loan amount will be at least 350,000 euros. Depending on the bank's valuation, the loan-to-value ratio could already be above 100%. The few banks that handle such a case will charge a corresponding interest rate. I therefore assume a monthly burden of at least 1,500 euros per month, tending rather toward 2,000 euros.

I would first try to save equity or borrow it from close family. In the present case, at least 100,000 euros should be available.

Tip: With your income, you should be eligible for housing subsidies in NRW. This involves a low-interest loan (1% for 30 years) with a repayment grant. In addition, the NRW.Bank takes the second rank if a bank loan is still required. Therefore, the financing bank will treat the subsidy loan as equity. For many, this subsidy loan is the game-changer!

Depending on the bank's assessment, the loan-to-value ratio could already be over 100%

It will be over 100% by 100%.

Especially since I can't imagine that with an end-terrace house from 2002, absolutely nothing needs to be done, so you can manage with just the purchase price + additional costs. No one will really want the 22-year-old kitchen alone, and in the bathrooms, the tiles still followed the motto "the smaller, the better and preferably room-high, like in a slaughterhouse"...

Please don't fool yourselves with the illusion of "We'll move in as is, save some money, and then renovate bit by bit..."
On the one hand, once you're living there with two small children, you will have neither the time nor the desire to live on a construction site. On the other hand, with your income, there won't be much to save.