Is construction financing realistic?

Hello again!

Our region is rather rural in the area around Worms! Here we can get a decent piece of land starting at around €120,000. We could also get a higher loan, but you have to set yourself a limit at some point. By the end of the year, we would have our own capital available at around €100,000.
I have already seen quite decent properties here starting at around €270,000. These are mostly from the mid-90s, usually heated with oil, with about 160m2 + cellar and approximately 500m2 of land.

One does wonder whether it might be better to go with an existing property! It's just not that easy to find the right property in the right place.
Normally, we wouldn’t have put so much pressure on ourselves, but we have now been given notice on our rental apartment due to personal use. That really gave us an extra push for the decision.
Now we have to look for an apartment + house or deal with new construction.... :-(

We had a first bank appointment today. So, with our targeted installments (1200€), we could finance a maximum of 331,000 + equity over 30 years. (That's too much for us) Then, with a 15-year fixed interest period at the Sparkasse, the effective annual interest rate would be 3.16%. However, there would still be a significant interest rate risk...
With 280,000€ to be financed and a similar interest rate, we would then have 2.97% interest and still a high interest rate risk. With Wohnriester, we could secure the interest rate for 30 years, but due to the additional costs, we have calculated an interest rate of about 3.6%...
I'm curious what the other banks will offer us.

Secure the interest rate for 20 years. The surcharge was only 0.1 for us, compared to 0.5 when we go from 10 to 15 years. By then, the biggest chunk should be paid off. And if you can still make [Sondertilgungen], you have a very low risk. Have this calculated for you, unfortunately only one bank explained this to us. The others calculated nicely with 10 or 15 years and would have earned a good amount.

Unfortunately, I have to rewrite the text...something didn’t work with the first attempt!

So we have made some progress now..

We were offered an interesting plot of land. The plot is about 1600m2 (400 building land, the rest agricultural land usable as a garden) on a slight slope. The price would be 65,000€ fully developed.

In this case, we would have to build with a basement. The front (south) side of the basement would have to be used as living space. We are now thinking of a prefabricated or solid prefabricated house with about 130m2 and a basement. A white tank (waterproof basement) is not necessary since the slope is dry and none of the neighbors have a white tank either. A neighbor wanted to drill a well and gave up at 18m. Groundworks would also not be so complicated since we have a complete agricultural setup and I also have an excavator contractor on hand. Disposal of earth, as far as necessary, can be done on our own fields.

Our hopeful budget looks like this: 240,000 house + basement; 40,000 ancillary construction costs; 70,000 for the plot including additional costs.

We could now spend 110,000€ of equity and had overall maximum of 350,000€ in mind as mentioned above.

We would calculate with turnkey delivery except for painting work and floors like parquet or laminate but no tiles. If possible and necessary, we would then see if we can provide other own contributions. Interior furnishings (except sanitary) including kitchen are already available and would not incur any additional extreme costs!

How do you see our rough calculation... Would it be feasible with our budget?

We already know that we can afford a total investment of €350,000. We could also get more; the €4,400 is currently at least the absolute minimum. Realistically, we are more likely at €4,800.

My question now is rather whether such a house construction project as described in my last post can be fulfilled with our desired budget?

Our hopeful budget now looks like this: 240,000 house + basement

That reads as if the house costs 240,000, the basement extra. Since you are assuming 350,000, I assume you mean 240,000 for the house including the basement? That won’t add up.

But everything reads well: high salary, inexpensive land, presumably manageable founding costs. A house including basement for 300,000 would not be a problem. However, you should consider that with family planning, one income might be lost.

But: I have read much higher house costs with much lower salaries here... it should be relaxed for you. Tip: before the kids come, pay off a good amount.