Is financing for construction projects feasible?

Hello dear forum community,

after having read along for a long time in the run-up to our construction project, we now also face the question of whether financing is generally feasible for us.

He (35), self-employed, income after taxes etc., about €2,200
She (26), tenured civil servant + minor employment, about €2,200 net (private health insurance already deducted); an increase in income due to a step increase next year, already announced salary raise, and planned wedding for next year is estimated at about €200 net.

Currently, we pay €650 cold rent, €350 go into a home savings contract, and another €500 go into a savings account.
The remaining balance at the end of the month remains in the account for any unforeseen special expenses.

Total costs for the plot (560 m² for €42,000) and house (161 m², with KfW70, without basement), currently amount to €347,000 including painting and flooring work and certain special equipment, incidental construction costs, outdoor facilities.

Equity amounts to about €30,000 in total, about half of which is in 2 home savings contracts, one of which could be terminated and transferred without deductions to the other.
(The amount of the home savings loan would be €200,000 with a savings amount of about €60,000.)

Potential own contributions are initially disregarded.

Since family planning is, of course, important for the future payment of the installments, the goal of the financing should be to be able to cover the installments from her income even during parental leave (parental allowance: about €1,400 (private health insurance already deducted)).

That was quite a lot for the first post. We look forward to suggestions and advice on what we should consider regarding financing.

Kind regards
Polarstern

Hi,

first of all, great that you have already gathered so much information.

However, I still have a few questions.

Can you write a bit more about the building society savings contracts.
1. How is the monthly rate split between the 2 building society contracts (which one is the building society contract that can be terminated)
2. What are the respective account balances?
3. What are the loan interest rates of the building society contracts?

Of the remaining balance that stays in the current account for unplanned expenses - do you use it up (if no special burdens have occurred - do you then create [e.g. an additional vacation]), or does it possibly later move to the overnight money account (how has it been so far)?

Your own income (self-employment) - how regularly can it be expected? Since when (approximately) has it been at this level?


so long for now.

That was quick with the first answer :)

Regarding the questions about the building savings contracts:

1.
The installment of €350 is only paid into the building savings contract with a loan amount of €200,000.
For the 2nd building savings contract, since it was concluded at the age of 19, the parents pay in €30 monthly plus the capital-forming payments of €6.65.

2.
Loan amount: €200,000 Current balance: about €9,000 (concluded only in 2011)
Loan amount: €20,000 Current balance: about €7,300 (this one could be terminated or also allocated in 3 months with a reduction of the loan amount)

3.
Loan interest rate for the building savings contract with €200,000: 2.8%
Loan interest rate for the building savings contract with €20,000: 4.25%

Currently, the money either goes into furniture, new technology, or sometimes an additional vacation. And partly also into the daily allowance account.

The income has been in this range for about 2 years now and can be expected regularly every month.

So far.

Hi,

it looks easier than it actually is.
The fundamental difficulty is that banks are more cautious with self-employment. Therefore, it is already good that your income has been verifiably at this level for the last 2 years.

A few additional questions:
1. What is the interest rate on the large home savings contract?
2. Is the purchase of the kitchen included in your incidental construction costs?
3. How high is your wife's additional minor income (I know - it is included in the 2,200)? Only if you want to say - what does she do there (childcare, cleaning, etc.)?
4. Have you already started anything (initiated land purchase, begun construction planning, etc.) or how do you come to your figures ("Land and house (161 m², with KfW70, without basement), currently amount to 347,000 including painting and flooring work and special equipment, incidental construction costs, outdoor facilities")? Maybe you have a breakdown of the planned costs so, for example, a construction expert can take a look to see if something is missing.
5. Can you get a grant somewhere else (parents, etc.) that increases your equity a bit?
6. Does capital still need to be considered for new purchases of furniture?
7. Does your wife also have such a nice child salary increase as recently described in another thread?

As said, from the current total income perspective, it looks simple, but from a classical financing point of view with the 1400 requirement, it is difficult in my opinion.
Therefore, this 2nd answer comes relatively quickly, but you will have to wait until tomorrow morning for the 3rd one :rolleyes:.

The €1,400 is, I believe, the parental allowance, not the desired installment.

But I also think that is rather difficult to manage. If you simply subtract the €30,000 equity, €320,000 remains, for which you should be able to manage at least an installment of €1,600, and even then the financing is not very "secure".

I would probably wait with the new construction. The "large" building savings contract is a good basis after all. However, the amount is insane. Allocation in about 12 years. :rolleyes:

For example, you can consider splitting the large building savings contract or reducing the contract amount (€100,000), then it would be allocated in 5 years with the current €350. Additionally, continue the €500 monthly on the overnight money.

Then you would have:

€30,000 in the overnight account
€30,000 building savings credits
€70,000 building savings loan 2.8%
+ the previous equity.

Since family planning is of course important for the future payment of the installments, the goal of the financing should be to be able to cover the installment from their income even during parental leave (parental allowance: about €1,400 (PKV already deducted)).

Polarstern

I believe the €1,400 is the parental allowance, not the desired installment.

It is, as I understand it, the parental allowance and the desired installment.