Is 900 euros per month enough for home financing?

Hello everyone,

Luckily, I finally found this forum

since we (partner 25) (me 28) pay 900 euros per month for our apartment, we got the idea whether we could finance a house for the same price?

900 or 1000 euros per month would really be no problem.

It will probably be an old building for about EUR 120,000-150,000.

Unfortunately, we don't have a building savings contract - do you even need one? - and also not a large sum as a down payment (it's "only" a few thousand euros).

We have often heard that it is not worth renting such an expensive apartment as we have. Therefore our question is whether it is true that you could buy a house for almost the same amount or even less. Because the money for the rent is gone!

Thank you for your opinion.

It won't stay at 120-150 thousand (renovation, furnishing, etc.). Furthermore, there are plenty of ongoing costs for a house (heating, electricity, waste disposal fees, water, insurance, and so on).

In addition, especially with older buildings, investments will come up at regular intervals.

All in all, with all these costs, you won't come out cheaper in the short and medium term (including loan repayments) and will have to tighten your belt very tightly. On the other hand, you will then have a property (how much it is worth is another question).

Another question: is a rent-to-own apartment not interesting for you? That would be something in between the two, with the advantage that you can get something new...

1. If 1000€ per month are available and you can acquire property for 120,000-150,000€, it should just be enough with a long loan term

2. You don’t have to have a building savings contract, many banks prefer to handle everything through building savings contracts, personally I don’t believe in that, but it’s a matter of belief

3. Without equity, acquisition is of course bad. You need at least enough equity to furnish yourselves and, very importantly, to also complete the purchase, which we’re talking about around 6000-8000€ (notary and property transfer taxes) + the same amount for the broker, given the purchase sums you’re considering

4. In what condition the house then is is naturally questionable, in some parts of Germany I can get a new build for that, in others just a wreck, and renovation costs a lot

I would personally never consider options like rent-to-own or even condominiums.

Hello Caslido,

I personally think differently than my predecessors. With 900 EUR in rent expenses, you are currently paying your landlord's property. And with this amount, you can also represent a financing plan for your own house.

Perhaps there is also a property for you that does not require additional modernization expenses and is offered to you without a broker's involvement.

The financing could look like this, for example:
135,000 EUR assumed purchase price (midpoint between 120,000 and 150,000 EUR)
2,295 EUR notary & court costs (approx. 1.7%)
4,725 EUR property transfer tax (3.5%)
142,020 EUR total

92,000 EUR construction loan, 5.10% nominal, fixed for 10 years, 100% payout, 1% repayment = 467.67 EUR
43,000 EUR KFW 124, 3.80% nominal, fixed for 10 years, 100% payout, 1.44% repayment = 187.77 EUR
7,020 EUR equity
142,020 EUR total = 655.43 EUR monthly rate

You should plan for additional costs for the house at about 2 EUR per square meter of living space.

One more tip: You can estimate about 47 EUR monthly rate per 10,000 EUR financing amount for your rough planning. This way, you get a quicker overview if you find a property with a purchase price different from the example above.

Best regards
M. Thiemann

I think one should point out in the financing calculation by the Mod. that it apparently involves a loan term of 35 years or more, which I already consider very long, as surely there will be a need for renovation twice during that time and the interest rate is uncertain for many, many years.
Furthermore, in my opinion, the ancillary costs are set far too low or I don't know what exactly is included.
([Wasser/Abwasser; Strom; Heizung; Versicherungen; Müllgebühren; Wartungsarbeiten; GEZ evtl. Kabel; Grundsteuer..])
If you don't have a passive house, I believe you can estimate around €350/month in ancillary costs for 3-4 people in 100-120 m².

Hello Blurboy,

that’s correct. The loan term is 33 or 35 years (depending on the financing component).

Unfortunately, that is usually the problem with 1% repayment. After the first 10 years, only about 13% is repaid, and there is the first interest rate risk.

That is why, in my view, it is necessary – besides the financing – to save money in order to be able to redeem a as high amount as possible in one go, or to set the repayment rate higher from the start.

The amount of additional costs depends on the energy standard the house meets and how many people live in the household. At the moment, banks are still calculating with 2 EUR/sqm.

With rising additional costs, this can of course increase further in the future – and a tenant is affected by this just as much as a homeowner.

Best regards,
M. Thiemann