Is financing feasible? Finished house for the money?

Good morning everyone,

My husband and I originally planned to build a house in 5 years when our building savings contract matures. However, it is very, very difficult to find affordable plots in our area. We have been on several lists of the cities and municipalities in our surroundings for several years and received an email a few days ago that a new development area is being created directly opposite our current rental apartment (perfect location for us) and we have the chance to get a plot.

The plot costs €170,000 including development for 435 sqm.
We have now estimated additional construction costs quite high at €50,000, so we would already be at €220,000 here.

For the house, we do not want to spend more than €200,000, as we would like to keep the monthly payment below €1,500.

At the moment, we pay €900 in warm rent and save €900 monthly in the building savings contract. There is currently about €5,500 in it. However, we would then cancel it.

Together we have a net income of about €3,900, I am a civil servant.

We do not want anything particularly special. 5 rooms, 130 sqm, 1.5 floors (knee wall 1.60m) and KfW55.

Do you think this is realistic?

There is little equity since we only got married last year for almost €20,000.
We would therefore only be able to cover the nearly €13,000 in incidental purchase costs.

We are grateful for answers and assessments.

Hello!

First of all, belated congratulations on your wedding!

Just add about 30k more to the ancillary construction costs. If you're interested, I can send you our current cost table.
Building for under 200k will, I'm afraid, also be difficult, but not impossible. It also depends a lot on your equipment wishes.

By when would the plots have to be built on? Maybe it would be an idea to buy the plot first, clear it a bit, and then build a little later.

Whether you can afford the loan payment depends on your standard of living. What are your monthly expenses?

And always keep the child planning in mind! At least one of you will then drop significantly in terms of salary. Would one of you then only work part-time?

Hello Evolith,

thank you very much for your response and the congratulations!

Wow - additional construction costs of €80,000? I thought we were already a bit high with our planned €50,000 and would easily manage with that :/

The plot must be developed within 3 years so that the house is ready to move into. We have also already thought about first leveling the plot a bit. That would definitely be a good option. We already received an offer from Interhyp for that (€550 monthly) with 1.5% repayment. However, one would have to be careful to be able to switch banks at any time, because otherwise the interest rates could be raised quite a bit if you then also take out the loan for the house.

Our monthly costs:
- €900 warm rent
- €60 electricity
- €80 internet, phone, mobile contracts
- approx. €150 insurance
- €60 monthly for my train ticket
- €30 monthly fuel money for my husband's carpool
- €100 for our cats

That makes about €1,400 fixed expenses per month – so about €2,400 left over per month. Of that we spend about €400 per month on groceries and currently still probably about €200 per month eating out and about €100 per person monthly on clothing, hobbies, etc. (which would of course be reduced). The remaining €1,600 goes into the building savings contract or is saved separately. So far I have still been paying off my car with €500 monthly, so we haven’t been able to save that much after the wedding. That will change starting in February though.

Although we both have a car, we mostly only use it on weekends (we are also considering selling one).

Since the plot is unfortunately so expensive (privately in our area plots of this size are sold for at least €250,000), not much remains for the house. However, we do not have high demands for the equipment. We would do floor and painting work ourselves. Tiling work possibly also with the help of friends. We will leave the outdoor area completely aside for now – that will be done sometime later.

We want to have children in 2-3 years. However, I would then work part-time at 73%, so I would have a net salary of about €1,500.

Then calculate everything again for the child case. Also, don't forget the daycare fees. Those really hit hard, especially for U2. Just looking now, it seems like the costs are quite manageable for you. €234 for full-day care. If you then sell a car, you'll also have some equity again.

Also, set aside some reserves in your account. Depending on the loan, you'll have a double burden for a while. At the moment, besides the rent, I am already paying off our loan with €1000.

I see the construction costs and the lack of equity as a problem. Especially building in Hessen is expensive. I would "bake smaller rolls" and look for an existing property and/or condominium.

Especially when children come, the burden will become a problem

Hello, welcome to the forum.

First of all, I think the considerations you have made are good. I don't think your current liquidity is a problem. Your future plans and demands stand in contrast to this.

Even with modest plans, a house for 200k will be impossible to maintain. The base price of houses is usually very low, starting at around 160k, but you want a very high level of finishing (Malervorbereitet would mean this at Okal Haus).
Of course, you can also lower your demands, no KFW 55, less living space, lower knee wall, no upgrade selections, more personal effort... But this is an incredible challenge for you, for your relationship, living comfort, and family planning that should be very well considered. No one here in the forum can take this off your shoulders.

80k ancillary costs are in my opinion too high, but it is always a question of what one considers ancillary costs.

Upgrades with the architect and in the selection center I see as house costs; you could easily add 20k to the base price of the house. And that is still not luxury, just small extras like roof overhang, window changes, a bit more electrical upgrades, external connections, and so on. Of course, all this is fictional, but I just want to sensitize you to it.

My recommendation to you would be:
Ask yourself how important exactly this plot of land is to you and whether you can live with many compromises when building the house. The risk of children (= space capacity and loss of income) should also be addressed here. If you can answer yes to that, buy the plot and wait 2 years to build.
.
Then you will have gained about 21k equity alone through the 900 €/month. Then the project already looks better. The 170k for the plot will probably mean around 600 euros additional monthly burden in the meantime... in addition, you will already have to maintain the plot during that time. So winter service, etc....