Is buying a house sensible in the current market situation?!

2020-09-23 15:24:24

We currently only feel pressured because prices keep rising and we don't want to complain in two years that we didn't buy anything and now would have to pay 100K more. The market situation is sometimes simply crazy: At 600K I'm not talking about opulent villas or anything like that

Life is too short to always wait for the right moment. Sure, you get annoyed when a bubble like in 2008 suddenly bursts, but what can you do? Such things cannot be influenced or predicted.

2020-09-23 15:28:47

The question would be whether: A) you get a property for it B) how much you then have to put in

600 k€ should be possible with your salaries and equity.

That's right. In my opinion, 600 k€ is already quite a lot, but if we want to "get involved," then there's no other way. Since our landlords are relatively old, we don't know what will happen afterwards (heirs live far away and it could then be "simply" sold and we would have to move out - we want to avoid something like that)

2020-09-23 15:40:19

I read "possibly a second child in 3-5 years." This probably means that one salary will be missing for a few years. The question about equity and how banks handle it: they have lending limits, and if you exceed these, the interest rate increases due to the risk. These are somewhere between 60% and 80%, depending on the bank. When buying a house, keep in mind that renovations, conversions, and new furniture will also be due. Additionally, the incidental purchase costs. These can quickly add up to x0,000€. I have always planned for my houses: 15-20% of the house price for incidental costs and personal wishes. The equity is quickly used up. Financing 600,000€ over 25 years is something around 2400€ per month. Is that really possible?

2020-09-23 15:46:05

A question regarding equity right away: Are the banks' conditions tiered, so that with, for example, €10k more equity you get a better loan (how is the tiering)?

Indirectly, there are tiers. These depend on the loan-to-value ratio = the ratio of financing to the value of the property according to the bank’s assessment. It can be that €5k more equity lifts you, for example, over the 80% threshold (because you were just above it before). Or you might need €30k because you are far from it.

We are really torn about whether we should take such a step. It feels very surreal to "spend" so much money on housing.

See it as a trade. The money is not gone; it is just tied up in a valuable property.

The median of the purchases relevant for us (house or condominium) would be €600k.

Equity approx. €110k (+ €30k as a buffer)

So the equity is almost gone just for the ancillary costs of the purchase. This means it will be a rather high financing = relatively expensive.
Loan approx. €575k, with a 30-year term (suitable for your age), approx. €2,100 monthly rate. This is feasible with your income (depending on your lifestyle and current rental situation).

2020-09-23 15:48:44

Indirectly, there are gradations. These depend on the loan-to-value ratio = relation of financing to the value of the property according to the bank's assessment. It can be that €5,000 more equity lifts you, for example, over the 80% threshold (because you were just above it before). Or you might need €30,000 because you are far from it.

See it as a trade-off. The money is not gone; it is just tied up in a valuable property.

Thus, the equity is almost used up for the incidental costs when buying. So it will be a fairly high financing amount = relatively expensive.
Loan approx. €575,000, with a 30-year term (suitable for your age), approx. €2,100 installment. This is doable with your income (depending on lifestyle and your current rental situation).

Not to forget the incidental costs of about €300-400 monthly. So we are at about €2,500 monthly for a used property.

2020-09-23 15:51:30

I read "possibly second child in 3-5 years". This probably means that one salary will be missing for a few years.
The question about equity and how banks handle it: they have lending limits, and if you exceed these, the interest rate increases due to the risk. These limits are somewhere between 60% and 80%, depending on the bank. Keep in mind when buying a house that renovations, alterations, and new furniture will also be needed. Plus the incidental purchase costs. That quickly adds up to tens of thousands of euros. I have always planned for my houses: 15-20% of the house price for incidental costs and personal wishes. That quickly uses up the equity.

Financing 600,000€ over 25 years is something like 2400€ per month. Is that really doable?

That the salary would be missing. Then two times child benefits and the parental allowance.
Do you mean that our equity will be completely used up by incidental costs, renovation, and furniture purchases? I feel uncomfortable with 2400 euros, how do you get to that?

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Is buying a house sensible in the current market situation?!

Alessandro

Alibert87

neo-sciliar

nordanney

Ybias78

Alibert87