Is construction financing manageable?

Hello dear members of the forum,

We have been following this forum with great interest for quite some time. The reason is obvious: we would like to build a house. First, I would like to thank everyone who writes such supportive posts here with so much enthusiasm, which has already helped us a lot in dealing with the topic of house construction.

Now, after some consideration, I have come to the decision to list our situation and ask for your opinion.

The plan is a detached house with about 170sqm of living space, with an attached garage with access to the roof, built as a solid prefabricated house. The whole thing is offered by a local construction company. Since I am not clueless about craftsmanship, I want to do the doors and tiles myself. A direct evaporation heat pump will probably be used for heating. A plot of land of about 800sqm is also "reserved" and fully developed (45 Euro/sqm).

Approximate costs we have so far:

Detached house 170sqm solid 36.5 bricks 180,000 EURO
Plot 800sqm 36,000 EURO
Additional construction costs approx. 30,000 EURO
Heating + underfloor heating 25,000 EURO
Tiles/interior doors/paint 15,000 EURO
Notary/taxes/others 10,000 EURO

This is roughly my list of the expected costs.
Interior furnishings and kitchen are deliberately not listed as they have nothing to do with construction or construction financing.

Our current financial situation:

I (27 years) employed on a fixed-term contract after 2 years of retraining as a field service employee, 1600 EURO net. My wife (27 years) takes care of our two children (4 + 7 years) and does a small side job with about 300 EURO net, child benefit of about 380 EURO.
Our current cold rent is 360 EURO and about 120 EURO additional costs.

Equity capital of 180,000 EURO is available, but we do not want to "sacrifice" all of it for the house.

We imagined a monthly payment of well, 450-600 EURO.

I now ask you for your opinion - criticism - suggestions for improvement regarding our project.
Or how you would do the whole thing.

Thank you in advance!
Regards

Martin

Hello! The first question that arises for me is what is included in the 180 T€ for the single-family house. You list heating separately, but what about sanitary, electronics, earthworks, surveying, special requests, buffer, etc.? You should consider the kitchen and new furniture just as much as possibly a new lawn mower, etc., since all of these are investments you will have to make in the near future. Once you have listed all of this, you can calculate how high your financing would need to be. And then you can say whether that would fit based on the desired rate and your other data. However, I suspect that with a relatively low income and a limited-term contract, it will be rather difficult. Did you save the equity yourself, or does it come from gifts/inheritance or similar?

The building and service description from the developer also states what is not included:

Floor covering work (living and bedrooms, hallway attic), painting and wallpapering work, exterior landscaping, disposal and final storage of excess excavated material, house connection costs for gas, water, electricity and telecommunications, wind-suction protection of the roof covering (installation of storm clips), smoke detectors according to BayBo, development of the property.

The 180,000 Euro still includes: central gas heating, 2 chimneys, one with 2 pipes and another for the fireplace in the living room. Tiles are included up to 25 Euro/sqm and we are not bound to any dealer.

There are no special requests except for the doors and tiles which will be done by the owner. Kitchen, bathroom and furniture should be financed with retained equity.

Regards Martin

Hello Martin,

how much of your equity do you want to keep for furniture, kitchen, fireplace, bathroom, outdoor facilities, and as a buffer? If we are supposed to help you, you have to be a bit more specific and name it.
How much are you currently saving per month? Do you keep a household budget?

How high should the loan be? Have you already obtained offers or conducted household calculations?

Good morning,

So, a list of our expenses, income, etc. please take a look to see if anything fundamental has been forgotten.

Thanks!

Regards
Martin

Hello Martin,

that already looks better.
However, you are now only calculating with 20K€ for incidental construction costs instead of 40K€ as above (incidental construction costs + notary etc.). I would prefer to include some buffer there. Also, I find 6K€ for a kitchen definitely too little. We are currently planning ours and are at least 10K€ above that :(
I also consider 3K€ for sanitary to be too low.
You should inform yourself about the connections. There are quite a few things that don't fit there either.
In addition, you haven't planned any buffer for a defective car, TÜV, clothes, etc.

Since you are so good with Excel, you can create a new spreadsheet where you calculate your monthly loan amount, interest (amount * interest rate /12), and annuity. Then you can see how long you would be repaying it.