House purchase with full financing / hardly any equity / option: inheritance with debts?

Hello everyone,

We have a net income of around €6,500.00.

We are just over 30 and want to buy a house that costs about €550,000. Equity of €20,000 available, no more. Currently expenses of about €3,000 for rent and all other things, like subscriptions, internet, shopping. Rent very low, just under €650 warm. Vehicle collection available, approx. €90,000 value. Unfortunately movable and therefore irrelevant for the banks.

If we want a single-family house for €550,000, we would have financing partners who would do it, but due to the 113% financing because of broker fees, land registry entries etc., only at "bad" conditions, usually ~ 2.28% for 15 years.

My partner would have the possibility to take over her mother’s house with a residual debt of approx. €180,000. Current value approx. €400,000, good location near Düsseldorf. Mom would then probably sensibly appear as a tenant and use the monthly rental income to service the ongoing financing.

Does it make sense to "gift" the mother’s house to my partner and have a land charge entered on it in order to realize better financing for our planned property? Or rather appear "debt-free" and only with the pure net incomes? Do vehicle(s) really play no role?

Thanks!

If they are not collectibles, the cars are irrelevant. Sell them, then you will be liquid. Buy cheaper ones or lease/finance comparable ones. Monthly liquidity is not the problem. Alternative: 100% financing and quickly save up the incidental costs or take out a consumer loan.

Consider the gift tax incurred with the gift to the mother, you need that in cash. Other heirs who need to be paid out? Rental income is taxable. Why should mom pay rent if she gives away her house? Then she could just as well give you the acquisition incidental costs as a gift and hand over cash. She could also mortgage the house and give you cash in the amount needed. Or you mortgage mom’s house, it doesn’t have to belong to you. Morally though, if your house is gone, mom’s might be due as well.

Hello! Thank you for the response. I thought [Hauschenkungen bis 400.000€ an Kinder] are exempt. There are no other heirs...

Yes, 400,000 from parents to children. Get advice on how the value must be determined and who among you is the beneficiary in which shares.

The additional security through the other house does not help you. The bank cannot take that into account in the interest rate. Practically, only the loan-to-value ratio goes into the interest rate, so your 113%. Other factors then decide whether you get a loan at all (but even here, not exclusively the additional security). However, I see less of an issue with the income. As already advised: Get some liquidity privately (possibly also through the sale of assets, possibly with a repurchase option) and at least push it under 110%. Are all incidental costs taken into account?

The additional security through the other house brings you nothing. The bank cannot take that into account in the interest rate

Of course it can, provided it gets a mortgage registered. That is the whole point of the exercise. It would be obvious to ask the mother's current bank about this arrangement.