Is financing the construction of a house feasible?

Hello dear community,

on recommendation, we came across this, and we hope to get from you an outside opinion on our plans.

My partner (28) and I (26) have just reached the phase where we want to build a house on our financed plot of land. We still have an outstanding debt of just under €30,000 for the plot, and we repay €800 per month.

About our financial situation:

Equity approx. €140,000 -> planned equity to be used for house construction €100,000
Monthly household gross income: €7,800 or approx. €4,900 net (both tax class 1)
Current monthly cold rent: €420 -> €620 warm rent
Repayment for the building plot: €800/month
Savings approx.: €2,150
Food/groceries/fuel etc.: approx. €1,000

The first offer for a turnkey house is just under €400,000, plus costs for the kitchen, incidental building costs, etc. We estimate an additional €100,000 here. Altogether, we are looking at a total amount of €500,000.

We don’t want to factor in financial support from our parents/grandparents; if we get something, of course, that’s nice, but we want to manage this without financial support.

We both work in secure jobs (social sector) and have been employed longer term with our employers.

Now to our question, does it sound realistic to handle building a house with the above figures, or would you advise against it? We are both currently very uncertain, as this sum of about €500,000 feels very overwhelming and makes us very insecure.. We don’t have plans for children for the next few years yet, but this will probably be an issue in 5 years. At the latest then, we will need a bigger and more expensive apartment.

Thank you very much for your support, and we look forward to your outside opinions!

There is as a topic in which there is an extensive list for life + household. Please fill it out as honestly as possible, then you will probably see that the 1000€ for food/groceries/fuel don't quite fit.

If the costs really are and remain like that, usually it’s a bit more, then 400,000€ loan is below the limit of what you can afford and what the bank will agree to (1,700 - 1850€ monthly rate = 35% to 38% of net income). The big question in this context then is how long the net income will stay like that and what the situation with children looks like. Because then it gets tight! Even if that is a few years away, for a certain period of probably (each) at least one year, one net income will drop by pretty much exactly 1,000€ to 1,530€, assuming you currently earn 50/50. With 3,900€, 1,700€ rate is quite a significant amount. It can work, but it should be clearly discussed beforehand, because then there is no 2-3 years of parental leave included!

I don’t know the limits of the kfw300 program. Are you still within those or just barely out? It could be that this issue might change again in your favor.

13,000 EUR net per month and doesn't dare to finance 500,000 EUR. Sometimes you really feel fooled here.

13,000 EUR net per month and doesn't dare to finance 500,000 EUR. Sometimes you really feel like being fooled here.

Sorry, but we have a net household income of 4,900€, which corresponds to about 7,800€ gross.

Sorry, but we have a net household income of €4900, which corresponds to about €7800 gross

Yeah, he just reads whatever he’s allowed to nitpick.

why don’t you pay off the €30000 first? Then you will be somewhat freer with the financing banks.

There is as a topic, in which a comprehensive list for life + household is given. Please fill that out as honestly as possible, then you will probably see that the €1000 for food/groceries/fuel doesn’t quite fit

I would also recommend that! Definitely.
And then make a proper calculation for the house construction, including detailed household management.
If necessary, you might get further by postponing, for example, the attic conversion to a later time, etc.
The numbers aren’t that bad (but not relaxed either)

Hello,

a food for thought.

If the plot allows it, then a duplex or a house with a granny flat is an option.

The construction costs are only 30% higher than for a single-family house. Additional income comes in and you can deduct the rented part for tax purposes.