Is home financing with 410K realistic and feasible for us?

Dear forum,

my girlfriend and I are also facing the decision of whether and to what extent we can afford a home of our own. We have now discovered a first property that is interesting for us and are now dealing with its feasibility. We would be very grateful for any comments and advice.

General information about us:

[*]We are in our early 30s, living in eastern Lower Saxony. We are both employed lawyers. We both have permanent employment contracts and have been working for one year. Both work full-time.
[*]There are currently no children, but about 2 children are planned medium-term (around 2020).

[*]In this case, she would take about one year of parental leave and then initially switch to part-time. However, in the long term, it is planned that she will return to full-time.

Income and asset situation:

[*]Our net income is about €5,300 (2,900 (m) / 2,400 (f)) or €9,900 gross. In addition, there is an annual bonus of about €3,000 net, which is performance-dependent and therefore should not be taken into account by us. Furthermore, further salary increases have already been announced.
[*]We have €80,000 in equity, of which we only want to use €60,000 for the house.
[*]We are expected to receive a larger inheritance (net approx. €200,000) in the next 5 - 10 years. In addition, further inheritances are also possible in the distant future (> 20 years).
[*]Outstanding debts are approx. €1,600 in tuition fees (0% interest with NBank) and €10,000 BAföG (also 0% interest). About €140 are paid monthly for repayment.

Expense situation:
Housing costs:

[*]current cold rent: €450
[*]current warm rent: €630 including gas
[*]electricity: €50
[*]gas: included in washing machine
[*]phone, internet, mobile phone: €50 per month

Mobility costs:

[*]relatively new car (3 years old), but not a family vehicle
[*]insurance: €33 per month
[*]taxes: €3 per month
[*]fuel: €20 per month (due to a fuel voucher from work)
[*]repairs: none so far
[*]inspection: approx. €15 per month (allocated)
[*]Is there a second car, motorcycle, scooter? No

Insurance costs:

[*]private health insurance: no
[*]liability insurance (including animals): €7 per month
[*]capital or term life insurance: no
[*]pension insurance (including Riester, Rürup, etc.): no
[*]disability insurance: no
[*]accident insurance: no
[*]household insurance: €4 per month
[*]legal protection insurance: €8 per month
[*]other insurance (e.g., travel insurance, funeral insurance): no

Living expenses:

[*]food, restaurants, drugstore, medication, miscellaneous: €520
[*]clothing: approx. €400 per month
[*]club fees/gym: approx. €40 per month
[*]cleaning: €120 (cleaning help and cleaning of suits, etc.)
[*]TV/video/audio/CDs/DVDs: €5 VoD services
[*]tickets (football, cinema, concerts, etc.): approx. €25 per month

Savings:

[*]Previous savings per month (experience value over approx. one year): a total of approx. €1,600, which is the minimum value - at the beginning of the professional life, for example, relatively much money was spent on clothes (several suits per professional, several pairs of shoes, etc.).

Other expenses:

[*]None

Income and expense totals:

[*]Total income: €5,300
[*]Total expenses: €2,070
[*]Balance: €3,230
[*]Of which sum cold rent and dispensable savings (e.g., savings rate for house): €450

General information about the property:

[*]How large is the plot?: 961 sqm
[*]What are its dimensions? n/a
[*]What is the standard land value? n/a
[*]New build, old building (year built), house type? Existing property (built 2001, last modernization 2012), detached single-family house
[*]Garages?: 2 parking spaces
[*]How large is the house? (living area / usable area): 184 sqm living area, 40 sqm usable area
[*]What is the market value of the land and house after completion? unknown, an expert is to be consulted for security.

Construction or purchase costs:

[*]Land costs: included
[*]Development costs: included
[*]Acquisition incidental costs (notary, court, real estate transfer tax, broker): €26,650 (notary and land registry: €6,150.00, real estate transfer tax: €20,500.00, no commission)
[*]Construction or purchase costs (incl. architect, structural engineer): approx. €500 for expert?!
[*]Renovation and/or refurbishment costs: approx. €2,000 (painting etc.)
[*]Additional construction costs (e.g., house connections, soil expert, construction power, etc.): included
[*]Outdoor facilities/terrace, paths, garden design, fences, etc.: included
[*]Financing costs (e.g., fees or commitment interest): not yet known
[*]Total costs: €439,150

Other costs:

[*]Kitchen costs: approx. €12,000
[*]Furniture, lamps, decoration: approx. €2,000
[*]Other "non-acquisition, acquisition incidental, construction or additional construction costs": approx. €1000 (washing machine + dryer)

Cost breakdown:

[*]Total costs: €454,150
[*]Deductible equity: €60,000
[*]Financing amount: €394,150

Additional information on financing:

We have so far planned that ideally we want to have paid off the house after about 10 years* (*taking into account the above-mentioned inheritances).

If the inheritances are unexpectedly missing, the repayment would of course be extended accordingly.

If we have forgotten anything, we will gladly provide the necessary information.

So, dear forum, what do you think? Is the amount manageable for us? Even if no inheritances occur?

We finance a similar amount under similar conditions.

Try using a mortgage calculator, enter 2% interest and 2-3% repayment over 20 years and ask yourself if you trust yourselves to do it. If the answer is yes, then just do it.

By the way, the bank will not consider the variable bonus, as it can be discontinued. Unfortunately, it does not have the status of a 13th salary. But you don’t consider it anyway.

Furniture, lamps, and decorations for 2000€ I would have rather added a 0 at the end... Otherwise, everything is quite doable

You don't count with money you don't have. If the testator becomes in need of care, you can forget about the 200 thousand. Apart from that, I would probably save more if I have a property in the plan. But the rest sounds pretty good.

Hello everyone,

first of all, thank you very much for the responses!

: That’s true, we probably deceived ourselves there. We assumed the amount we would need to budget for a move to have the bare essentials at first. In the medium term, however, new furniture would probably be necessary as well, so your amount is probably more realistic. Thank you very much for the hint.

: Sure, that’s why we broke it down like that and did not list it as equity. It would just be a "nice-to-have."

The savings rate could be better, that’s true. We are working on that.

However, we are glad that the general tone so far seems to lean towards "feasible." But we are also open to criticism or suggestions!

Even without the inheritance, the loan amount should be manageable with your income (however, you should be aware of the ongoing costs caused by the two planned children; based on that (and the current rent excluding utilities), your current savings rate should, in my opinion, be significantly higher)... what I find, to put it politely, very unusual is to talk about an expected inheritance as a “Nice-to-have” and to roughly estimate when (hopefully?) the inheritance will come, which should then preferably pay off the house within ten years!!