Is financing and house construction possible?

Hello dear house-building community,

I have been thinking about building a house for more than a year now. A short introduction about myself: I am 22 years old, permanently employed as a web developer/programmer.

Financial situation:
I already own a semi-detached house, built in ’91, last modernization in 2012. The house has been rented out since 2012: 850 euros cold rent.
There is a solar system on the house, income: 170 euros monthly.
Salary: 1750 euros net
Part-time self-employed since 2008: income over the last 2 years: monthly 250 euros

Currently, I rent for 400 euros cold rent, 70 sqm. At the moment I am still paying off loans for the last house renovation amounting to 1000 euros monthly (there were about 10k euros renovation costs accumulated, heating, interior fittings).

The loan expires in June. Then I will have around 3,000 euros available again in total. (The tax burden from the house is already calculated in the income from the solar system/self-employment)

My expenses are as follows:
400 euros cold rent
150 euros additional costs
270 euros vehicle leasing
200 euros reserve for leasing a new car
100 euros fuel
300 euros groceries
200 euros other ancillary costs
150 euros cash withdrawals
150 euros reserves
75 euros insurances

At the moment I therefore have no equity, but I would still like to dive into financing - especially since I already have the semi-detached house as property, value, whatever - I was thinking of a monthly rate of 1,000 - 1,200 euros.

Now, one finds some information about realistic building costs here in the forum, I am considering:

A plot of land, approx. 400-500 sqm (at 100 euros per sqm) -> 50,000 euros

Solid single-family house 1 1/2 or 2 floors, no basement, garage later. approx. 120 sqm

+ fitted kitchen ~ 7,000 euros (I also have a kitchen in the other house at this price and am very satisfied)
Kfw 70 should be possible.

Actually, I aimed for a 110% financing of a total of about 250,000 euros, with 25 years and 3% interest that would result in around 1,200 euros monthly rate.

Now the question is: is 110% financing even conceivable - is financing at my income even possible? And is 200,000 euros enough to build a house turnkey? By turnkey I mean floors laid and walls wallpapered in this case. Including all additional costs?

It turned out to be a bit longer, but thank you for your interest and your tips!

Oii thinking about building a house at 22 already. The other one is probably an inheritance, since you definitely didn’t build the one from ’91 yourself :D
Honestly, I would advise you to wait at least 5 more years and save up. Don’t let the low interest rates tempt you now. Aside from the fact that 200,000 turnkey is a hefty number to manage.

You don’t know where job and love will take you. :) Use the freedom and continue educating yourself, then your salary will look completely different in 5 years... 1700 net as a programmer is a joke :D I know what I’m talking about, I’m one myself, and about 2 years ago I could almost choose my salary. Starting salaries ranged from 40 to 120k.

Your problem is: You’re putting up the other house as collateral, but now for example you have a tenant who doesn’t pay rent for 12 months, what will you do then? You won’t be able to pay your rates anymore, and the bank will take both houses.
In my opinion, you should be able to handle the new house on your own, and only use the other house to improve the financing conditions. Self-employment won’t help you with the bank, it will probably even hurt... they don’t like hearing the word self-employed :D
Unfortunately, your net salary is too low to manage such a project.
And when you build a house, your cold rent won’t disappear either, since roughly that’s what you’ll have as monthly additional costs as a homeowner. And you also need to build reserves.

Well, my opinion.

hardly any bank pays attention and if then only under modest conditions.

regardless of the targeted property:

- 3000 net, partly self-employed, photovoltaics etc.... the bank will probably credit less for that
- no equity = at least 110% financing (purchase plus acquisition costs), banks only do that with good and secure income and then with an interest surcharge
- what about the additional costs? if someone pays 150 euros monthly for 70sqm, they should easily more than double this amount for a home of their own.

that doesn’t fit

a tip:

i also managed to finance without much equity, could just barely pay the acquisition incidental costs and small stuff (20 thousand).
i have 4600 euros net and the bank approved a burden of 1200 euros (which i also have, but with 2% repayment) as borderline.
reason: low equity!

now anyone who has 3k net, from which at least 300 euros are deducted due to risk... and then starts financing with "nothing" .....

Hello dear critics,

thank you for your somewhat demotivating responses.

In the meantime, I have made my decision as has the bank: 216,000 euros loan as 110% financing at 2.68% for 15 years with [PSD Bank]. 106,000 euros as a mortgage on the existing property, credited as equity in the second contract (annuity loan of over 110,000 euros).

I think I can be satisfied with that.

... so you don't have a 110% financing, but both houses are moderately mortgaged = considerable equity in the form of a unencumbered house. Congratulations on the terms, it was probably a mortgage loan with PSD (that does evoke a bit of envy :rolleyes:).

In the meantime, I have made my decision and so has the bank: 216,000 euros loan as 110% financing at 2.68% for 15 years with PSD Bank. 106,000 euros as a mortgage on the existing property, which is accounted as equity in the second contract (annuity loan over 110,000 euros).

I think I can be satisfied with that.

Congratulations! With the second house as equity, the conditions are not so surprising. That is actually not a 110% financing since you secure half of the loan with your other house!

But where do you get the remaining money for the construction? Or has your equity increased significantly???

With 216k euros, you will hardly get a building plot + turnkey house with everything included...