Is home financing possible like this? Alternatively, save equity for a few years

Hello everyone,

just a few data points about us:

- Me 28, her 29, 1 child 3, no more children planned.
- Net income together including child benefit ~3300 (me 2300, wife 800, child benefit 192), holiday + Christmas bonus about 2000 net per year.

We could buy a newly built semi-detached house with 160 sqm living space and 395 sqm plot share for 330,000,- (+16,500,- notary and property transfer tax). There would be no further costs. The semi-detached house is completely finished inside including garage and outdoor facilities. We currently have 70,000,- equity. Of which we would use 40,000,- for financing (20,000,- planned for kitchen + some furniture - we already have most of it) and 10,000,- as reserve for us.

We have already been to banks and they all said that it is easily financeable. But somehow I fear that they just make the numbers look good.

I don’t want to go into all the financing details, but an offer from Allianz with 34 years fixed interest and a monthly loan rate of 1100 (loan amount would be fully repaid in the 34 years). I also think that with our existing equity and the current interest rate, a rate noticeably below 1100 is not realistic/sensible.

We keep a household book and our monthly costs, really all possible costs (insurance, personal entertainment, childcare, food, ...) that occur in the month/year, calculated to a monthly value, amount to about 1400 euros per month. We currently pay no cold rent, only 200 euros warm rent (in case that seems a bit low to you )

We have been saving 1800,- per month via a savings plan on a daily money account for just under 2 years now.

If I now take the savings rate of 1800,-, add the current 200,- euro "warm rent" 2000,- and subtract 1100,- monthly loan rate and all possible new ongoing ancillary house costs (rounded up 500,- (160 sqm x 3,-)), we would still have 400,- "extra" left. Of which we would use 200 euros per month as a savings rate for a new car that will be needed at some point and put the rest aside.

So can you do it this way or should you have doubts? Any important cost factors overlooked? An alternative would of course be to save equity for a few years and then look. Would that be more sensible?

Although there is the risk that rising interest rates and increased construction costs negate the additional equity.

Thank you very much!

That means financing 290k with 3,300 net?

About 1,100 is 1/3 of your current net income. Then there are additional costs + reserves for the house.

I am a fan of having a house standing, preferably like new, and not taking big risks (construction volume increases, renovation, etc.).

So I see an advantage here. Also that you probably have a fixed interest rate for the entire duration? That means no more rent increases. Whether you can manage the burden and if the income is expandable, you have to assess better.

Maybe ask an intermediary again.

You are currently living there practically for free, so I would probably stay there for another two or three years and save more equity. You will never live that cheaply again, so you should take advantage of it. If the monthly loan payment has decreased in a few years, you can keep afloat in an emergency with just one salary (e.g., due to unemployment). I assume your wife works part-time and could increase it if necessary.

i.e. financing of 290k with 3,300 net?

I rather believe 310k, since from the 40k equity capital to be used, the ancillary acquisition costs still have to be deducted.

Potential savings may possibly lie in the financing itself. 34 years of fixed interest rate have to be paid and could possibly be questioned again.

Wait, continue paying rent and save for another 2-3 years? We asked ourselves the same question and decided to realize the project now. What use are 20,000 euros more in 2-3 years, which first have to be saved in addition to the rent payments, if the interest rate has risen by 0.5%? For us, there was no alternative to realizing the project now.

But with the two of them, it's about 65,000 in three years, if I remember correctly. I would still want to take advantage of the very comfortable financial living situation. With the savings rate, you definitely can't go wrong. At a 500 euro savings rate, it would look different, I agree with you.