How much house is realistic for us?

Hello dear house building forum,

since we are roughly planning to buy a house in the Hannover region in 2016 (used or new build), I am already busy reading through the forum here to at least reach a layman’s level of knowledge.

I have already learned many numerous tips here and I wanted to thank you for that first at this point.

Of course, every life situation is different, and therefore I ask for your experience related to our life situation. I would like realistic values and nothing sugar-coated, but from what I follow in the posts here, thankfully the user community confronts one with the hard truth, which is a good thing.

We (30, 29 and 4 years old) currently rent an apartment. Warm rent amounts to €625 + electricity and gas €120. Our monthly net income is about €4000. Both permanently employed, one directly at Volkswagen. Therefore, very good job security is given. Besides the rent, we can still set aside €500-1000 monthly. Our equity currently amounts to €10,000, which is to be seen as emergency money we do not want to touch. The usual basic insurances (household contents + liability, etc.) are already in place.

The desire for homeownership is growing meanwhile. Of course, you can only afford what you can afford, so I am mentally calculating which option is manageable for us. Buy an apartment, buy a used house, or build a house.

Our ideas for a house: 1.5 stories, no basement, about 130m2 +/-, 4-5 rooms, carport for 2 cars, kitchen and, now comes the big snag, the house would have to be move-in ready. Since both of us are fully employed and also have childcare duties, there is hardly any free time. Thus, no time for self-work.

Are our wishes realistic given our circumstances, or does it make more sense to rather look for something used right away?

If any information is missing, I certainly do not think of everything, please ask.

Thanks in advance

It makes sense – although you could take another look at where the remaining 2255 - 2755 € per month is going. A household budget book might not be a bad idea for a while – 1200 € might be a bit too little for financing. Otherwise, it is certainly not unrealistic. It's a shame that you practically have no equity... that makes it even harder for used properties – especially since it sounds like you are not the craftsmen yourselves. Do you want to build directly in Hannover or preferably somewhere between WOB and Hannover? (asking because land prices directly in Hannover are of course different). Otherwise: 200 K€ for the house (new build, ready to move in – for example the rocket from Viebrockhaus or 100 other providers) 30 K€ additional costs 100 K€ for the land (if not directly in Hannover) -> 330 K€ financing requirement. At 2.3 % interest (very little equity, 15 years) and 3% repayment, this results in a monthly burden of 1460 € per month. But then there would be no luxury kitchen, carport etc. at first. You have to see if it would make sense to include those in the financing.

We (30, 29 and 4 years old) currently rent an apartment. The rent including heating is €625 + electricity and gas €120. Our monthly net income is about €4000. Both permanently employed, one directly at Volkswagen. Therefore, there is very good job security. Besides the rent, we can still put aside a good €500-1000 monthly.

Keep a household budget! A very rough guideline for living expenses is €600 for the first person, €300 for the second, and €200 for each child. That makes €1100 for you, so there should be €2900 "left over" monthly. Where is this money? (This is also something a financing bank might ask.) That the house should be ready to move into is understandable. I see it similarly. Your expectations regarding the size seem reasonable and not exaggerated. The location will significantly influence the price.

So

We keep a household budget. Since we save about €500-1000 every month, the remaining money after the usual fixed costs (such as rent with heating, energy, insurance contributions, phone, kindergarten, etc.) goes towards daily expenses and is spent generously. Eating out, excursions, and so on. Since until a few years ago we barely had half the household income (a job change was planned for 2013), we know that realistically we can also get by with significantly less and still be satisfied and know how to do it. At first, we just enjoyed the new good income a bit. But we have stayed grounded. So that fits.

But anyway, thanks already for the hint. When I’m home this evening, I’ll calculate exactly based on the household budget how much we can definitely spend monthly to repay a loan and pay incidental housing costs. Just off the top of my head now, I’d say somewhere around €1000-1500.

No, so neither of us is really skilled handicraft-wise. I’d say we could manage wallpapering, painting, and laying flooring well. But that’s where it stops. I might trust myself with more, but I lack the experience to avoid botching it and, as mentioned, the time.

As a desired location, we have chosen Sehnde near Lehrte, since I work in Braunschweig and my wife in Hannover. Sehnde is a good compromise between distances and land prices. I don’t know them exactly yet because I haven’t found any offers so far, but it will definitely be cheaper than Hannover or Langenhagen.

Okay, the numbers sound good so far in that they bring me back down to earth a bit. I roughly estimated about €250,000-280,000 all in. But I probably misjudged that quite a bit.

Would significant incidental housing costs be added to the monthly burden? How high are these roughly speaking? I’ve never owned property or lived in a house before, so I lack the numbers to estimate better.

As a desired location, we have chosen Sehnde near Lehrte, since I work in Braunschweig and my wife in Hannover.

I personally would have chosen Hannover or Braunschweig then. In other words: not both should commute the same distance, but one goes to work on foot, the other commutes further. To put it somewhat colloquially, it needs to be locally optimized (means of transport, daycare, primary school, and yes, also land prices and availability of houses or building plots).

Would significant additional housing costs actually be added to the monthly burden?

All ancillary costs that a tenant has also apply to homeowners. Only usually higher (first approach: look at the utility bills from previous years and then scale them to the planned square meters). Possibly you save on heating costs if you currently live rather expensively and in the future very efficiently (on a larger area).

Additionally, there are costs that landlords cannot pass on, e.g., reserves for maintenance (benchmark ~2 euros/m², for new buildings initially (!) IMHO negligible).

The garden and everything around it also swallows one or another euro (tools, plants, etc.).

Depending on the location of the house, follow-up costs can also arise due to mobility.

Hm, basically you are right with Braunschweig or Hannover ... But there are also other reasons involved. However, I think this would be the wrong place to discuss that. In any case, Sehnde is optimal for us in every respect.