House purchase or house construction, what price is realistic?

Hello,

we are currently living in a relatively large, newly renovated condominium by us. Actually, our plan was to live here for a few years, save up more equity, and then buy a house. But since the market here is currently very competitive and prices seem to keep rising, we think it is smarter to buy now.

General information about us:

[*]Me 30 years old and permanent civil servant
[*]Her 24 years old engineer and permanently employed

Income and asset situation:

[*]Me 2,800€ net, her 2,100€ net = 4,900€ Increases are definitely expected here
[*]Equity: Currently about 25,000€ and about 40,000€ which we can borrow from family

Costs:

[*]Apartment repayment: 750€
[*]Service charges: 270€

Overall, we live relatively frugally and currently save at least 2,500€ per month.

We would like to sell our apartment as part of the house purchase/construction. We paid 170k including ancillary purchase costs and renovation; currently, there is still 150k€ debt on the apartment. It is a 95m^2 maisonette apartment, where we have recently converted the attic. We expect a profit of 50,000€ from the sale.

What total amount do you consider realistic for our project?

Used properties from the 50s to 70s in the size we want (150m^2) can be purchased for between 300-400k, although renovation would of course be necessary. New build properties of this size cost at least 500k.

Do you see a property around 500k as realistic, or would we be overextending ourselves?

We have a financing broker who told us an amount of 550-600k is realistic. However, I am quite risk-averse myself and don’t know if such a high amount and the associated high monthly rate are really realistic. Is it normal that two incomes are needed to manage the financing and that it can get tight if one income disappears?

Thank you very much in advance.

Hello!

Your income is good and if you come from HB, in my opinion also among the "high earners."

If you realistically generate 50k from the apartment + 25k current equity, you would already have 75k. Currently, you are still saving 2500 every month, which is not little and will add up until the right property/land is found.

Up to 500k I would also trust you and should not be a problem at the moment. The question is, when is a child planned and how long will "only" parental allowance be received.

So I would initially repay as high as you dare, and then reduce the repayment during the phase with less income. Accordingly, a loan that allows several repayment changes. That's how we did it back then and the plan worked :)

Thank you for your assessment. We are actually from Bremen. What you wrote was also my idea: repayment first high and then taper off a bit. We definitely want children, but that still has a few years to go.

Do you use the special repayment for the [ETW]?

We wanted to at first, but now we prefer to save in order to keep the equity available for the house purchase.

We wanted to at first, but now we'd rather save to keep the equity available for the house purchase.

But you increase the profit of your apartment by paying off the loan faster... you then pay more into the repayment with your loan. That would be my first choice, to put everything into the apartment, and based on your numbers, I noticed that this is not happening.
Many roads lead to Rome, I just wanted to mention it anyway.