Is home financing possible?

Hello HB-Forum,

we want to build in the coming months and are currently in the evaluation phase to see whether we can afford everything or not.

I (31 years old) currently earn €2800 net (employee, permanent contract), my wife (31 years old) is currently on parental leave (until summer 2017, then working 50% again = €1000 net). Currently, we receive €368 child benefit for our two children (5 and 1 year) and recently also €150 care allowance. Since we have lived quite "frugally" in recent years and our current apartment is quite cheap (€500 cold rent - about 100 sqm), we have saved equity of €115,000. In addition, there is about €10,000 in building savings credit, which we want to keep as a reserve and not include in the financing. Both cars are quite new (about 2 years old), so they should actually last a few more years. We have no other monthly expenses!

We now have the opportunity to buy a plot of land of approximately 770 sqm for €100,000 including all incidental costs (notary, tax, development). The offer for our turnkey dream house (160 sqm living space, KfW55, solid construction, central ventilation system, double garage, fireplace) is €320,000 including additional construction costs. We have budgeted €10,000 for the kitchen, about €25,000 for garden/terrace etc. We do not need many more furniture items, as we invested a lot of money in the living room, bedroom, and children's room a few years ago. As an additional buffer, we have set aside €5,000 (you never know!), so this brings us to a total amount of €460,000. Minus our equity, we would need to finance +/- €350,000.

What do you think about this amount? The sum does make us a little worried, but the bank said it would not be a problem (after all, they want to sell us something). Can you give us further tips and suggestions?

Many thanks and best regards,
Schwabenhuber and family

It always depends on what you can pay off monthly. 350 T€ at 5.5% (2.5% interest, 3% repayment) would be a 1600 € rate. With one salary (2800 €), that would be very, very ambitious (not realistic). If the second salary reliably adds the 1000 €, one could dare it.

Of course, you can always wait, but the children are not getting any younger, and especially when the 5-year-old starts school, it would be nice to already live in the desired area later on.

Hello BeHaElJa,

thank you for your response. So my wife will 100% work again, she wants to work again herself and that already worked smoothly with our first child. Her employer (insurance) is also very family-friendly, she already has the 50% position secured.

Correct, our eldest will start school in summer 2016.

We are currently saving about €750 per month (building savings). This is one reason for our solid equity. Together with our basic rent, this amounts to about €1,250 per month!

Topic interest rates: We are likely eligible to receive the Z15 loan. This would mean that we would get €250,000 at currently 0.75% (10 years). The shortfall of €100,000 would then be financed through our house bank. However, we have not yet submitted an application, so it is not 100% certain. Although, in our opinion, we should meet the criteria so far.

Topic interest rates: We are probably entitled to receive the Z15 loan. That would mean we would get €250,000 at currently 0.75% (10 years). The shortfall of €100,000 would then be financed through our house bank. However, we have not yet submitted an application, so it is not 100% certain. In my opinion, we should meet the criteria so far.

The house bank probably does not like that because it does not want to be listed first in the land register. However, the L-Bank offers complementary financing for this. It is important that the Z15 loan can only be repaid at 2%! So after a 15-year term, there will still be a lot of money left.

Sorry, the house bank wants to be listed at the top, but the L-Bank is already there. That's why the house bank is not very willing to cooperate.