How much could we finance?

The calculation you mentioned in your first post is just a calculation from the bank

As far as I understand, the esteemed gentleman is someone from a construction company... who might occasionally produce a nice invoice.

Your wish is for example including outdoor facilities. But no house builder constructs outdoor facilities; you do that yourselves. Unless you build with a general contractor, who usually offers the paving as well. 170,000... well, just check the forum to see if the amount could be correct or how many square meters you get.

It surprises me that child benefit is counted as income. Is that normal???

So, I don't want to comment on the numbers, but a real invoice can look very different from one made by someone who wants to sell something. They like to leave an item off the table to make something look feasible.

The child benefit is taken into account, but also the LHK of the child, which is then negative and everything is fine again. You just have to remember that it will eventually stop. For the TE, that takes longer than the fixed interest period. So for now, it's completely okay. The wage increases in the next 10 years will surely balance that out again.

I have now obtained an offer from a bank. They would lend us a total of 270,000 euros without equity (so 110%) at an interest rate of 4.05%, 2% repayment, and 5% prepayment option per year. According to their calculation, this would be a monthly rate of 1361 euros. The remaining debt would be 158,000 euros. But that would also be the maximum they would do. So it really seems quite easy to get the money. There would be 1623 left for living expenses, subtracting 300 for additional costs leaves 1323 for everything to live on. 400 euros already go to food for a family of three, leaving only 923 for fuel for two cars, which easily costs another 300 euros per month, leaving 623 for phone and television, which with the TV license (GEZ) also uses about 100 euros, leaving 523. Since we don’t want to run around naked in the bushes, we also need clothes, especially for the little one who is growing and already needs 100 euros alone, we tend to be ragged and 50 each is enough, which adds another 200 on the minus side, leaving 323 for which I still have to insure us with the most basic things, car insurance 2 times 40 gone, left 243, household insurance 30 gone, 233, legal protection 10 euros 223 left, then the little one also has to pay for daycare, meals etc., later school still another 100 euros gone, rest 123. Retirement provision would have to be suspended, the 240 euros would no longer be possible. If anyone notices something essential for living that I have not listed, please say so. But in my opinion, in theory, it would be barely possible to manage the thing without equity, but it would be highly risky since there would be absolutely no reserves and retirement provision would additionally be reduced. If it goes wrong, you have no house in old age, rent to pay, and only a small additional pension to the statutory one. So I would rather not want to build like that. Now let’s include equity to reduce interest and rate. I have a question because we do not know how banks view equity. 12,000 euros in overnight money accounts/savings books should clearly be equity. Unit-linked life/pension insurance where 20,000 euros are already in there that you would get upon cancellation/sale. 5,000 euros in a building savings contract that is fully paid up, but I do not have the contract here (unfortunately it is at home) because of building savings contract loan. The question is, do I now also have 37,000 euros equity if I do not use it for building? We want to keep it as reserve except for the building savings contract and the pension insurance, which we only want to suspend in the building case. Or would the bank only consider 5,000 euros from the building saver as equity, which would not really change much.

Now let's bring in equity to reduce interest and installments I have a question here, since we don't know how banks view equity. 12,000 euros in daily allowance accounts/savings books should clearly be equity Fund-linked life/pension insurance where 20,000 euros are already in it, which you would receive upon liquidation/sale 5,000 euros in a home savings contract that is fully saved but I don't have the contract (unfortunately it is in my hometown) because of the home savings loan The question would be, do I now have 37,000 euros equity if I don't use it for building? We want to keep that as a reserve except for the home savings contract and only suspend the pension insurance in case of building. Or would the bank only consider 5,000 euros from the home saver as equity, which would not really change much.

Equity is what you actually use for the building! Even if you had a million lying around somewhere, in your case the equity input would only be 5,000 euros = basically building without equity!

If anyone notices anything else that is essential for life and I have not listed, please say so.

Reserves for repairs to the house, maintenance of the heating system, and likewise for the vehicle (winter tires, inspections), medications can also occur and be correspondingly expensive.

Hello,

My questions now are:
1. Is the price for a house and everything around it set somewhat realistically?
2. Is the financing really as easy as suggested?
3. What would be a realistic amount one should finance with our income situation? (or should one even build with it at all)

Hello Paranelaos!

Question 1 depends on what is included in the offer and how frugal you are. 170K€ for 130m² living space is already tight; as a builder, you really have to hold back and include only the essentials. What also surprises me are the 150€/m² fixed prices from the city of Salzkotten (I come from the area) – such land reference values only exist in the city center of Salzkotten, and the city offers municipal plots in the "Bümers Grund" development area for 120€. The 120€ is realistic for Salzkotten; 150€ is in my opinion definitely too high, so I wonder where this value comes from!? With a 500m² plot, that’s a hefty 15K€, and if a location like Thüle would also be an option for you, you could save as much as 42K€ at the same plot size and a price of 68€ per square meter.

Regarding question 2: Basically, financing is no rocket science, you really can and must calculate it bluntly like that. When it comes to the question of equity, you can of course count amounts that are in a life insurance policy as equity; you just have to pledge the life insurance to the bank, meaning you could definitely enter financing with about 35K€ equity – but then you are truly right at the limit and more or less immediately overdrawn if your car breaks down. I would use a maximum of the pension funds and building savings plan, then you would have 25K€ equity and still 10-12K€ in the bank for emergencies.

Furthermore, about the repayment of loans through proceeds from expected real estate or inheritance cases: from professional experience, I can only recommend clarifying this – even if it hurts – in advance or during the lifetime of the testators and (if there are corresponding possibilities in your home area) already transferring the real estate to the heirs now. In return, the grandparents receive a lifelong right of residence or similar, meaning that relatively little changes for them. The advantage is that there will be no disputes in the case of inheritance because everything is already settled. Inheritance communities with unclear ideas about inheritance division and property values are often a lengthy money drain, which you absolutely cannot afford if you could use the capital to repay your liabilities immediately or in the medium term. So, if you expect (!!) to repay the property in Germany early with the proceeds from the grandparents’ real estate, be sure to raise the topic within the family. And arrange it, even if it is unpleasant. If you encounter resistance in the family, you will know that you cannot or should not count on the capital so easily, because you will face the same (possibly even greater) resistance in 15, 20, or 30 years if the property transfer is not arranged today. Your motives are perfectly plausible, but that does not mean that other family members feel the same way. Some, for example, are simply emotionally attached to a house and cannot part with it – which could be a problem for you.

Regarding 3: In your place, I would not look for a plot at a location around 150€, but at most 120€, better 90-100€. That is available in your area if you look around, even significantly below that. Alternatively, I would also consider a spacious condominium possibly with a garden. You are currently calculating costs of about 270K€ – for that amount, you can get quite exclusive apartments or used houses with manageable follow-up costs in Salzkotten. With your income, I would just tie a thick rope in my wallet at 200K€ + incidental costs and then see what you can get in Salzkotten for 200K€. I would definitely not build new with your capital and 75K€ land costs.

Good luck!
Dirk Grafe