Is financing possible with ING?

Hello dear forum members,

I have been a silent reader here in the forum for a while now and would like to share our situation with you and ask for your assessment of whether the approval from the bank (Ing-Diba) is realistically to be expected.

I (f) 30, net income (part-time) - 1830€
Husband (m) - net income (full-time) - 2730€ + 13th salary (included in financing) + self-employment (at least 500€ / monthly – we left this out)

Loans: Husband 280€ / monthly - car loan, but no consumer loan taken out Remaining debt: 15K€ (3-4 years remaining term)

Me: Camera - 50€ monthly + mobile phone 40€ monthly until 2023

Current rent: 660€ warm (but we have to move within the next 1.5-2 years due to lack of space).

Our Schufa scores according to self-disclosures: me - 97.6% and husband - 98.5%
No overdraft or my husband had an overdraft, but had it deleted before the application and marked accordingly for ING-D.

No child yet, but one is coming, so there is great time pressure to complete the financing (the goal is to have approved financing before my due date next year).

Equity: due to a previously very generous lifestyle on my part (travel every month, etc.) no significant equity: 30K€ in the account. We declared 20K€ of this as equity. Now, however, we are saving monthly in a targeted manner.

That’s about our financial situation.

About the planned purchase property:

With a lot of luck, we found our dream plot southwest of Berlin (in the commuter belt) and reserved it. 540m2 165,000€

A 165m2 house is to be built on it (city villa, without basement).
Additional purchase costs (notary, GES): 13,800€ (which we will pay from equity)

The total loan amount including house construction amounts to 499,000€ incl. outdoor facilities, buffer for unforeseen expenses, buffer for kitchen, etc. Since my husband comes from the civil engineering sector and also has his own construction company together with his father, we have planned and included EL in the amount of 48K€ in the financing.

Our application has been with Ing-Diba for 2 weeks now and our nervousness is increasing day by day. We received the green light in the preliminary review, but I am quite skeptical and insecure because of our consumer loans and little equity.

However, we consider this opportunity to build a house in our dream location currently very suitable and, in view of current rents and rising real estate/construction prices, relatively inexpensive and affordable for us (we both get annual salary increases).
The question I would like to ask is, do you see any stumbling blocks on the way to approval from the bank? How high is the chance of approval or risk of rejection given our current finances?

Thank you very much and have a nice 3rd Advent.

Best regards
Jana

I am not an expert in financing; there are others for that.

What rather surprises me are the low construction costs on your side. I would have expected significantly more.
I also find it personally difficult to go from generous consumption suddenly to frugality and building immediately. But I assume you are under building obligation?

Why the time pressure with the financing? Will your finances then get worse?

And last but not least: if the application is already with Ing-Diba, then just wait ;-) Despite Corona (or because of it?), construction financing went very well again this year, and there certainly will be no shortage of work there :)

The question I would like to ask is, do you see any stumbling blocks on the way to approval from the bank? What is the chance of approval or risk of rejection considering our current finances?

The ING is known to me as a bank that only does standard transactions. No idea how you stated everything, but as additional stumbling blocks I see the kitchen in the financing and €48,000 equity contribution. I fear you wanted to hear something more positive, but actually, the only thing to do is to wait for the approval or rejection. Otherwise, I see it similar to Ysop***. Everything seems a bit tight and very optimistic. Construction may become more expensive, income temporarily decreases due to children etc. On the other hand, there is currently €5k net. That already helps somewhat.

Phew, so your loan amount with the same net income we also have, so that's definitely doable. We just had a lot more equity and a really completely different lifestyle. Your advantage is that you already work part-time, so with children you would presumably continue to have this income, right? That's a bit of a sticking point for us :-( The construction costs also confuse me a lot. We are well above that and we also do a lot ourselves. Maybe first buy the land and pay off as much as possible for 3 years? Then you would have significantly more equity and already learned to save ;-)

You can only keep your fingers crossed that the bank saves you from this nonsense. Perfect recipe for a financial and possibly also personal disaster.

Thank you for the quick reply,

Time pressure regarding financing for several reasons: the most important is the parental leave that I will start in 2021. Then my income for the year decreases, but since, as I said, I already work part-time, I estimate (of course initially optimistically) that I can return to my current working hours (20 hours in the home office) after one year. Thus, my salary will be back at the same level plus €200 child benefit (which I will, however, spend on the baby anyway).

The second reason is that the development area where we have reserved the plot is 90% sold out. If we don’t buy it now, we will probably no longer be able to build there.

The third reason is also not unimportant and is closely connected to the constant price increases. Even in 1.5 to 2 years, prices have risen considerably, which puts the goal of "own home" even further away for us.

Regarding lifestyle adjustments, I agree with you, the lifestyle will change anyway due to the child. And, admittedly, even if switching to a more frugal lifestyle is harder in reality than expected, trips, clothes, and other consumer experiences eventually no longer satisfy. Besides, none of that completely disappears, but maybe gets scaled down for a few years – that’s how I see it, maybe actually too optimistically...