Is financing without equity capital possible at all?

Hello everyone,

my husband and I would like to build a house in the near future. Since we both have degrees and have only been working for 1 1/2 years, we do not have any equity. Some friends of ours, who also just graduated recently, are currently building with a prefab house company because the company counts their own work as equity. We also sought advice there and were presented with the following financing plan:

- House with basement, garage, kitchen, ... = €230,000
- Additional construction costs: €40,000
- Land: €200 / m2 = €100,000
_________________________________________

Total: €370,000


Monthly financing:

- KFW 1.40% interest & 2.80% repayment = €175
- KFW 1.40% interest & 2.80% repayment = €175
- Bank loan: €270,000 2.80% interest & 1.20% repayment = approx. €940
_______________________________________________
Total: approx. €1300


We know ourselves that this is probably "nicely" calculated. Since we want 3 children, the interest rate should be fixed for 20 years. It was not done because we are both doing Wohnriester.

By the way, our income is approx. €4000 net.

What do you think? Better to wait or take advantage of the current low interest rate? What would you recommend as the maximum monthly burden for us?

Best regards & THANK YOU

Exploit the current interest rate situation and see Wohnriester more as a nice to have rather than a fixed component!
Have you already signed the building savings contracts, if so in what amount?
I don’t know where you live but for the prefab house I find that a bit expensive, good used properties are not worse but cheaper to get.

Regarding the offer: Unfortunately, I don’t reach the stated interest rates from KFW, through the Efficiency House program you only get 50,000,- interest for 10 years fixed at 1.21% + 2.8% repayment = 167.08 monthly.
Then through the KFW ownership program 50,000,- 10 years fixed at 2.5% + 2.8% repayment = 220.83 monthly.
And then the bank with 270,000,- at 2.8% interest + 1.2% repayment = 900,- monthly.
The KFW does not offer a fix rate for 10 years!
The bank usually doesn’t either!
I would rather allocate the high repayment to the bank loan, that hurts the most if after 10 years you then have to continue financing 240,000,- at 5% interest.
And before you pump the money into Wohnriester, better make an annual special repayment into the loan.

Regards!
Michael

Hello Tilex,

we have similar net incomes as you (about €3800), but our equity capital is €60K.

However, with long-term fixed interest (20 years) we don’t get the interest rate of 2.8%. You can almost add another half to one percent on top of that. By the way, the interest rates also depend on the equity capital. The less you have, the higher the interest surcharge. We are trying to get 20% equity capital, because there is another threshold there. With zero equity capital, it is of course more difficult to find a bank that will go along with it. Then you have to bring in more [muscle mortgage]. Whether that is possible alongside your job, you have to decide for yourselves.

Where did you get the interest rates for the KFW loan? I find them here on the internet?

Programm 153


[TH]Nominal interest rate (effective interest rate) per year
[/TH]
[TH]Term
[/TH]
[TH]Repayment-free grace period[/TH]
[TH]Fixed interest period[/TH]


[TD="class: star, colspan: 4"]*Before the end of the first fixed interest period you will receive an offer for follow-up financing.

Programm 124


[TH]Nominal interest rate (effective interest rate) per year
[/TH]
[TH]Term
[/TH]
[TH]Repayment-free grace period
[/TH]
[TH]Fixed interest period
[/TH]







[TR="class: even"]





[TR="class: odd"]





[TR="class: even"]





[TR="class: odd"]

2.35 % (2.38 %)	8 years	8 years	8 years
1.95 % (1.97 %)	20 years	3 years	5 years
2.50 % (2.53 %)	20 years	3 years	10 years
1.95 % (1.97 %)	35 years	5 years	5 years
2.60 % (2.63 %)	35 years	5 years	10 years

[TD="class: star, colspan: 4"]

[TR="class: odd"]
1.20% (1.21%)

4-10 years

1-2 years

10 years


[TR="class: even"]
1.65% (1.66%)

11-20 years

1-3 years

10 years*


[TR="class: odd"]
1.80% (1.81%)

21-30 years

1-5 years

10 years*




We have personally settled on a rate of €900-1000, since we also still have plans for children. Since my wife brings home a bit more than I do, the loss is correspondingly higher. But we also want to continue having 2 cars and be able to go on vacation every year. Better to make special repayments than not be able to pay the rate anymore. With several children you have to consider that the parental allowance is reduced more and more, since you surely can/will not be able to work full-time in between. What happens after parental leave then? Can you actually still go to work with 3 children? So you should not plan based on what you have now, but what you earn during and after parental leave.

Regards
The Musketeer

Annuity Loan

[TH]Nominal Interest Rate (Effective Interest Rate) per Year[/TH]
[TH]Term[/TH]
[TH]Repayment-Free Start Period[/TH]
[TH]Fixed Interest Period[/TH]


[TD="class: star, colspan: 4"]*Before the end of the first fixed interest period, you will receive an offer for follow-up financing.

[TR="class: odd"]





[TR="class: even"]





[TR="class: odd"]

1.20% (1.21%)	4-10 years	1-2 years	10 years
1.65% (1.66%)	11-20 years	1-3 years	10 years*
1.80% (1.81%)	21-30 years	1-5 years	10 years*

I hope you both have seen that the fixed interest period is always only 10 years! So I would rather worry about what comes afterward because you really don't know conditions of 5-6% fixed for 10 years! I actually find the houses being bought very expensive for their size! We live in an expensive area, still very rural, where land costs us 200-300,- per sqm; in the rural town it quickly goes over 400,- per sqm. We bought 2 houses about 250 years old for 105000,- and then renovated them, no new property can compete in price with individuality and size! We had no equity and provided a substitute security of over 20000,-! But these terrible Reisbrett prefab houses seem to meet the taste! Greetings!

@onkel böckes

The KFW 153 is not an option for us.
With the KFW 124, we will see if we use it. The 10-year fixed interest rate for 50K€ is then manageable.

230K€ for a house (with 3? children's rooms), garage, kitchen, and basement I do not find excessively expensive.

Buying an old house and renovating it yourself is not everyone's taste.
And if you hire craftsmen and want to bring the house energetically to a similar level as a new building, you will probably pay far more than a new building.