House purchase + modernization

Hello dear forum community,

after reading for a while, I have decided to actively participate in this forum. I want to give everyone a big compliment for this great forum!

Since many of you have already gained your own experiences regarding real estate financing, I would like to ask you to give me an assessment of this topic.

About our situation:
I (25) civil servant on probation (about 1.5 years left) net income plus allowances etc. 2150 euros
She (25) employee in the public sector net income 1600 euros also plus allowances.
Total income 3750 euros plus allowances, which should not be included in the calculation but rather be seen as a bonus.
So far we pay 480 euros rent (warm), which corresponds to about 360 euros (cold).
In addition, I currently save 1100 euros and she 275 euros monthly to build equity. That makes a total savings rate of 1375 euros. Despite these high savings rates, we can still live well and enjoy one or the other nice evening. Both save 150 euros monthly for car and vacation.
We have no children yet, but we want 2-3. We plan to start in about 2 years, when the "nest" is built/bought.
We have about 65,000 euros equity, of which we want to use 50,000 euros for the property purchase. This would leave us a cushion of 15,000 euros.

We already have a property in mind, which will cost about 250,000 euros to acquire. Since it was built in the 70s and thus still requires one or the other modernization, we expect total costs of 330,000 euros plus about 20,000 euros ancillary costs.
After deducting equity, financing of 300,000 euros would be necessary.
My question now is whether it is realistic to get financing of this amount. We have imagined an annuity of 1100 euros monthly. The current rent (480 euros) will presumably go toward ancillary costs for electricity/water/heating/insurance etc. About 300 euros monthly should still be set aside as reserves for the house, so the mentioned maximum monthly annuity is 1100 euros.

What do you think?

I am very grateful for your answers!!!

Kind regards

Der Senfling

Hello!

Equity/income corresponds to the loan amount so far. You should consider that additional costs (property tax, water, etc.) will also be incurred with the installment.

I would advise you to request a long fixed interest period. I cannot assess whether the renovation costs are sufficient... There are professionals who know what, how, where, and when things cost.

With 2-3 children, I flinch. Will you earn more later as a civil servant? It is of course clear that this should be included in a household calculation for you. For example, daycare, higher vacation costs, hobbies. Are you eligible for benefits? You will also have to insure your children in private health insurance. That also costs a few euros more.

Hello,
thank you for the detailed response.
Property tax, water, etc. are to be covered by the current rental expenses. That is 480 euros per month. That should be about right for approximately 200 m2, right?

My income increases automatically by about 80 euros net every other year. In addition, there are promotions approximately every 8-10 years, which then amount to 200 euros net. For the first child, I would receive, in addition to child benefit, a family allowance of 120 euros, for the second + 105 and the third + 330.
You are right, while I am entitled to subsidies, I would then have to insure the children at 20% in the private health insurance. The state covers 80%.
Unfortunately, I have no idea what costs children cause, but that should not be underestimated. With increasing age, the costs surely rise as well...

Do I have to expect problems if I want to finance the modernization in addition to the house purchase? After all, in that case I would want to borrow more money than the house is initially worth. If the bank sets the lending value another 10% below the purchase price, it looks even worse.
For your information, the plan is that a KfW loan and two Riester home savings contracts (together 60,000 euros) are to be included in the financing.

Regards

Der Senfling

Definitely go through the house with an expert who will then tell you how much you still have to do and can do. And what it will cost you. The devil in such cases unfortunately hides in the details. And many nasty surprises can arise. We have just completely renovated a house from 1962 and are in the final stages. There were indeed a few surprises.

I can only agree with Koempy. For us, it was a semi-detached house from 1936. Since then, it has been clear to me: go through with an expert and make sure you have twice the amount of money (equity or loan) of what the expert estimates as approximate renovation costs. Then it will work. Otherwise, many sleepless nights are inevitable for the family's internal controller.

This is what the finance woman of such a company said two years ago.

Thank you for the answers. We also wanted to consult an expert. Alone to have the certainty that we are not paying too much and, as you already said, to be able to estimate what the modernization will cost. I don't think it will be a complete renovation for the property. It's more about converting it to be as energy-efficient as possible and designing it so that we like it.