How should we finance? Budgets and their distribution?

Hello everyone,

We would like to build a house.
Building plots cost around 240k EUR including development here.
Plus house construction with a general contractor, we are then at about 520k EUR.

Currently, my wife and I earn about 7300 EUR net together.

Our equity is 388k EUR plus a condominium with a burden of about 40k EUR, which we currently live in.

For me, the question now is whether we should invest all our equity directly or rather keep a buffer for possible emergencies?
Also, this equity is all our savings and essentially represents our retirement provision. Much of it is invested in stocks.

Ideas and opinions on this are very welcome!

Best regards,
Christian

PS: 2 adults (39 years) + 1 child 12 months.

The director will roll out the red carpet for you. What will happen with the ETW? Rental? I find the ratio of land / new building poor and fear there will be a few more K added. So better to recalculate that. Refinancing is more expensive and pointless with your conditions. So better to keep 40-50k in reserves and then use it as a special repayment if it is not needed.

Use as much capital as needed until a 60/70% loan-to-value ratio is reached, thus obtaining the lowest interest rate. Invest the rest in funds and blue chips (or strong dividend stocks) and use the dividends as special repayments. This way, the property almost pays for itself. However, Germans will not like this method because of too much potential risk. On the other hand, there is a 4-8% return per annum.

The postscript about retirement provision is interesting, though. Self-employed and no pension in sight? No private provision? In my opinion, a property is not initially a retirement provision. Otherwise, I also consider the construction costs to be too low, although you don't say a word about what is going to be built. For an 'average' 160m² with a basement, garage, and a few extras, easily another 100k will be added, more likely even more. Nevertheless, the initial situation for a property is of course excellent, you just have to approach it correctly. For new construction, for example, never allocate all equity capital immediately, always keep a proper buffer; at the latest with the outdoor facilities, the plan will go up in smoke.

Hello everyone,

Thank you very much for the many ideas and opinions on this. We don't want to build too big and not too decadent either. For 130 sqm with medium-quality fittings of the four walls.

Regarding the [ETW], we have to see, renting out is not necessarily our thing. It would at least be a stable source of income, but it always takes work. I would conservatively estimate the apartment to be worth around 180k. 95 sqm 4-room kitchen bathroom.

I also had the idea of further investment in the capital market. Especially with regard to retirement provision! And yes, you read correctly: otherwise no security. Riester, direct insurance policies, etc. were always too unclear and costly for me. Have always been on my own at the stock market. Be it classic buy and hold assets or ETFs with broad diversification and low TERs.

So it's really something to consider with the 60 to 70 equity ratio....Hm..

Thanks again and best regards, Christian

There we already have a small mistake, the Etw has an approximate value of 2000 euros per m2. So quite a good region, further away from metropolitan areas.

Your house but minus land, additional construction costs and purchase incidental costs 210,000 euros for 130m2 where is the outdoor area?
The garage etc?

Here I would seriously deal with it again.

Otherwise, the rest fits easily.