Is a financing request possible?

Hello everyone,

this is my first post and, as with many, my wife (28 years old) and I (35 years old) are naturally occupied with one question when building a house.

How much house can we afford?

In our area, the plots are relatively inexpensive, so we would pay 45,000€ for a 700m2 plot.
([inklusive Erschließungskosten, Grunderwerbsteuer, Eintrag durch Notar])

For the house, we would not want to spend more than 200,000€.
For everything else, we would calculate a buffer of 40,000€.

Thus, the costs for a single-family house without a basement would be as follows:

Plot: 45,000€
House: 200,000€
Other costs: 40,000€
Total: 285,000€

At the moment, I earn a net salary of 2,500 euros, 13 monthly salaries.
My wife is currently looking for work.

Our equity currently amounts to 50,000€.

We had imagined a monthly installment of 1,000€.

Do you think the financing request is possible with the above information?

Regards, MCN

Hello,

in my opinion, the rate is set too high. What are your current running costs? I don't know what standard of living you have, but with the planned rate, not much would really be left each month. If there is money left at the end of the year, then you put it into the special repayment, but this way you can also overextend yourself...

Neither will the construction sum be feasible, nor can you finance €1000 with only €2500 net.

If then a broken car or even a child comes along, the whole thing will fall apart.

Thank you for the response,

At the moment, with my basic salary, we can save 1000€ per month.

We pay 400€ for warm rent, plus there is a KfW loan of 128€ per month (further education). This would be completely paid off by April 2015.

I would like to add that since 2010 I have spent on average 4 months abroad per year.
This amounts to roughly 1500€ net per month.

We would like to manage the installment with one income; the installment can also be 200 euros lower.
We would also like to make larger special repayments; as already mentioned, one would not undermine oneself with high installments, and if there is something left over, this money could be used for special repayments or other purchases.

My wife is currently looking for work; however, this is not so easy because we live in a structurally weak region.
My wife is also not German, so the job search is not made any easier.

Nevertheless, I am optimistic that she will find a job.
She studied interpreting, has worked in this profession, and in her last job she was responsible for administrative tasks on construction sites abroad. Foreign languages are therefore not a problem for her (Russian, Ukrainian, English, German) both spoken and written.

Regards MCN

I'll put it this way... In an emergency, you can manage 1000 € with 2500 €. But your problem is the lack of equity. Everything you have will go toward the land. There is no buffer there. And with a 250,000 € loan, you will most likely not be able to build a house. You have to deduct 40,000 € in incidental construction costs. You still don't have landscaping, a garden, a garage, or a kitchen.

And honestly: with 400 € rent, personally, I wouldn't finance a house that constantly threatens me (considering the financial burden). At that rent and your relatively good income, it is financial nonsense to build. It looks different when someone pays almost 1000 € cold rent.

As a homeowner, you will have to take out one or another insurance that you might not see now. You also have to build reserves. Utility costs will also be higher.

Hello Der Da,

Thank you for your reply.

We are of course aware that 400 euros including utilities for 75m² is already very little, for both of us our apartment is also big enough. Like many couples, we want children.

If the offspring comes, this apartment would be too small... maybe it would work for 1 year, but eventually the offspring should have their own "four walls."

At the moment we are in the happy situation of not having to build, even though the desire is there and interest rates are currently very low.

We also want to build only when children are here and my wife can pursue a job... that would of course fundamentally change the situation.

Until then we can save more equity, since I described the current actual situation in the first post.

I think the problems are the same for many who have a desire to build.

Low interest rates, low equity

or in two or three years

Higher interest rates (e.g. 2%), higher equity

It is a calculation example... and I think that with 2% higher interest rates on a loan amount... 250,000€ (additional costs due to interest) you will ultimately lose money despite higher equity... as I said, a dilemma that concerns many.

On the other hand, of course, you don't want to rush anything.

Best regards MCN