House purchase: Financing (with/without equity)

Since I typed my first response while you were posting yours, here’s a quick addendum:

No, even at 35/40 we don’t kick anyone out at the bank. And building savings only really makes sense if you still have quite a few(!) years ahead of you before acquiring property, not four/five years, more like seven/ten, so that you end up with a reasonable building savings amount. Regarding interest rates on the building savings contract, I wouldn’t worry about that for now, since none of us know how high the interest rates will be when you actually build/buy.

Why not? We have less household income, no children either (but definitely none will come) and were in our mid-30s when we bought. Getting financing was no problem. However, we had the additional purchase costs available in cash, which at that time in 2012 was 7,000 euros. So it was a 100% financing. We could have also financed the additional purchase costs, but that would have resulted in an interest surcharge on the entire loan amount. We also got the follow-up financing now in May 2016 (forward loan 12 months) without problems. However, the lending guidelines have changed. They assume you have children and only calculate with one income, because the second one is omitted due to the (nonexistent) children. Furthermore, they also look at the pension information to see how much money you will have in retirement if you are not finished beforehand. So it has become stricter. For us not so bad, we do not have a second income and will be finished before retirement. The follow-up financing was only necessary over 77% of the lending value, we have paid off that much. However, it must be said that we bought very cheaply and the rate at the beginning was less than 700 euros - that was 25% of the household net income. From 2017 we will have the same rate, but with 3.25% repayment instead of 2% as before. The repayment rate is also important because you have to be finished before retirement so that the financing is not rejected due to too low a pension. Apparently not all banks see it equally strictly, so I would go to a financing broker, because they can compare many banks ad hoc and pick one that makes it possible. And I would definitely save up the additional purchase costs beforehand! Even if theoretically not needed, it makes the entire loan more expensive, and not just the amount over 100% if you have to finance it.

No building savings contracts? No lead time/housing benefit used so far?

What are the chances of still putting together a decent financing at 35/40?

Good. If equity has also been saved up by then.

However, at the moment I really see black. No more than 40% of net income should go towards financing. The question is what you get for that price in your area.

+ continue 'saving diligently'

If you continue saving diligently, then where is the current "diligent" equity?

No, even at 35/40 the bank won’t throw us out. And building savings actually only makes sense if you still have a number of(!) years ahead before acquiring property, not four/five years, rather seven/ten, so that a reasonable building savings sum accumulates. Regarding interest rates on the building savings contract I wouldn’t worry at first

Building savings can help if the building savings contracts are ready for allocation, we consider the building savings loan as equity in the financing assessment. Especially if the BVS are below the blanko limit, meaning they don’t even stand subordinated in the land register.
Especially if you don’t have much equity anyway, you can leverage that well through a building savings contract. (In this case the interest rate on the building savings loan is secondary)

Will they kick me out of the bank immediately if I want to start financing at 35/40?

Uh, why? Do you think there are no home builders and borrowers today who are 10 years older than you?

Hello everyone,

we (30/27, no children yet, wedding in November, net income 3,000/month) are planning to build our nest.

Unfortunately, we have not saved any equity so far. But for further family planning, moving out of our too small apartment is due anyway.

My question therefore: Does it make sense to take one of the numerous "purchase without equity" offers from various banks and financiers? Or rather save the necessary equity in the next few years? What are the chances of still putting together a decent financing at 35/40?

What are your experiences? What would you advise?

Thanks in advance to everyone who takes the trouble to answer

Not everyone has to live in a single-family house. Your incomes are simply too low for that. The tips about saving here are quite cute... but probably won’t change anything for you. To afford a single-family house with your income, you would need a substantial amount of equity. It should be 100-150k by now. How long do you want to save? 20 years? That’s all nonsense… A cheap condominium and/or increase your income.

A cheap condominium

... or a small used property like e.g. a terraced house