House purchase - improve equity through installment loan?

And if 10-15k in your case results in interest costs of 1-2k, something is also wrong. I would have expected about 60 euros in interest costs per year for three years.

In your position, I would rather focus on reducing expenses and make sure you save up 110k equity or more as quickly as possible on 550k (basically loan value).

If necessary, you can cover the missing 10,000 euros through an overdraft (although such an amount for your income should really be a matter of less than 6 months and can thus be "quickly" saved up during the construction phase).

Or you have the same problem as many others, namely that there is much month left but little money left. But parental leave will break your neck. That will cost you about 21k EUR + tax (up to 25k EUR) per child.

Thanks first of all for the opinions.

Correct, we have not been the "saver" type so far. I also do not see that we will save up 110k equity before buying a house, but we are aware that with our income we can get an appropriate loan. If the current search yields anything, we would want to seize the opportunity. At the same time, the car search is ongoing, and we have now found something. Now we would have no problem taking out a 15k installment loan with 1k loan costs (interest, fees, etc.) over 3 years, since the +15k equity will benefit us significantly more with the later mortgage than the 1k loan costs of the installment loan. For the first 3 years, we will then pay off the installment loan and the mortgage simultaneously.

If you are only going to build next year anyway (this year you won’t manage to start construction anymore, otherwise your planning would be different), then you don’t need a loan for the car anyway - given your income. And saving for 12 months will easily bring you an additional €40,000 in equity by the start of construction. You should probably think about that. But that’s just the modest opinion of a real estate banker ;-)

First of all, thanks for the opinions.

That's right, so far we are not the "saver" type. I also don't see that we will save up 110k equity before buying the house, but we are aware that you can get a corresponding loan with the income. If the current search yields anything, we would want to strike. At the same time, the car search is ongoing, and we have now found something. We would have no problem taking out a 15k installment loan with 1k loan costs (interest, fees, etc.) over 3 years, since the +15k equity will benefit us much more with the later mortgage than the 1k loan costs of the installment loan. For the first 3 years, we will then pay installments of the installment loan and repayment of the mortgage.

Then please just leave it. With that income, the equity doesn’t fit. You live and consume, which is okay. But only 40k equity means just about the incidental purchase costs plus possibly the kitchen. 550k may then not be enough to build. What then? Finance 700k? As Toxi already wrote, children cost money. Part-time income, trips, clothes, vacations. You should make a list of expenses.

When I read the headline, I already wanted to throw my hands up in despair. "Another person with a modest income who wants to ruin their future," I thought. Obviously, however, you have a decent income. More than we do. Slightly less than we would have without children.

My next thought was: How is it possible that with this income, you have saved so little equity? I know many people with very good incomes who manage to regularly consume their entire good income. You definitely need to tackle that and consider whether you want to change your lifestyle at all.

Last point: Leasing is certainly something to consider, it can even be worthwhile. An installment loan can even improve your creditworthiness, keyword: credit experience. But mind you: one that is serviced regularly.

Hello Vincent, I can only tell you from my own experience that for the loan conditions the ratio of salary to loan installment is only one component - that was completely unproblematic for us too - however, we went quite high with the loan-to-value ratio, and that's where the banks' interest rate markups get really steep! So, financial capacity is one thing, the loan-to-value ratio is another (no less important for the banks)! And remember the additional costs...

Best regards from Frankfurt!

P.S.: With that salary - with a child - we even saved 3,500 per month... - so I would definitely recommend 'stepping it up' a bit here.