Is my house building plan realistic?

Hello,

I am new here and currently at the beginning stages of house planning (construction start autumn 2016). Now I am wondering for how much € I can realistically plan a house that I will still be able to pay off before my retirement.

The facts:
-I, 35 years old, about €2400 net
-My partner, 29 years old, about €1600 net
-However, in a few years there will be a desire to have children, which means my partner's income will probably decrease.
-Equity of about €150,000 is available
-The house should be paid off by my retirement, so in about 30 years.
-At retirement, several life insurances for retirement provision will be available
-With our current standard of living, we are currently saving about €20,000-22,000 per year together. However, so far we have not had to pay rent, electricity, heating, etc., which will be the case in the future. Children will also drive expenses up...

House wish:
-Single-family house with about 200 sqm (solid house, not prefabricated),
-Balcony, small conservatory, without basement
-Spacious double garage with a small workshop extension
-Gas heating combined with solar, a wood stove for the living room
-Building plot of about 1100 sqm is reserved (€80,000)

My current plan:
-Borrow €350,000, so a total of €500,000 is available for the construction project, minus the plot leaves €420,000.
-If I calculate correctly, I would have to repay about €1200 per month so that the loan is paid off in about 30 years
-We could contribute a few own services (painting, electrical installation, windows at purchase price)

What do you think? Am I calculating too optimistically or too pessimistically? Will €420,000 be enough for the house? Or let's say rather €380,000-400,000, since there is no house equipment at all yet (kitchen appliances, garden tools, tools, everything one needs for living).

Phew! Tough question. Many facts.

- The EL: Don’t count on it too optimistically. You can save a few thousand euros. But it won’t make a big difference.
- The equity: Many people don’t have that much. A very big plus.
- Especially the desire to have children: not only does equity temporarily disappear. But children also cost money.
At times you have to manage everything with roughly €2,400/month. That must be absolutely secured. Even if the main earner is accidentally sick for longer than 6 weeks and receives sick pay. In other words... €15,000-20,000 should remain in reserve. As a family of three with car and stuff and insurance, electricity and all that stuff you have fixed living costs of about €1,200/month.
- Building plot around €80,000: It’s large, but not expensive for that much area.
- Don’t forget incidental construction costs and others (plus notary fees, court, land transfer tax)
- Outdoor facilities (I always say: €15,000-20,000 are gone for sure without seeing much. This also includes garden tools... because you listed them...)
- As for the rest of the assumptions: So far okay. Without having calculated it down to the last cent.

OFF THE CUFF (often not bad).
1) Either build now, but with about <=€250,000 credit. In other words, max. <=€400,000 total realization costs including all incidental costs and so on.
In other words: scale everything down a bit. Garage with workshop and other things simply realize later. Build a smaller house. Enclosed space and square meters cost almost linearly more and more money. Do you really need 200 sqm? Really?? Wouldn’t 140 also easily be enough here?
Also: “Rome wasn’t built in a day either” (quote from a building expert here recently)
With €80,000 price for the plot and €150,000 equity, it is certainly a (borderline) feasible project. Not unreasonable!!

2) OR: Continue to save the mentioned €20,000/year in equity until the desire to have children is fulfilled, wait a while after that, then build the house with the wife working again. Already 5 years are +€100,000 in equity, that is significant (hoping for still comparatively low interest rates).

3) Almost like 2, but via “detour through buying a sensible and easily resellable condominium.”

Best regards
Thorsten

PS: "Just barely paying it off" (Your quote).

PLEASE PLEASE FOR YOUR SAKE NEVER EVER DO THAT.

Keep air under the keel. You have a wife and family.

You have to live for yourselves, not for the house.

As I said, with 150K equity you already have many options.
Just not 200 sqm with all the luxury you described.

Thanks already for the opinion
Or just asked like this, how realistic is it that I get 350,000€ from the bank with conditions of 1,200€/month over about 30 years?
I calculated these values with a financing calculator online, no idea how the reality looks like

Waiting another 5 years is no longer an option It will take at least 1 year until the building plot is developed, then there should also be a bit more saved up. oh yes and with the 80,000€ for land all incidental costs are already included and it will probably even be a bit less.

You're welcome.

The 350T with 1200 / month is becoming really tight. I would say we are more likely at the framework data you mentioned at 1400-1600/month. There must be no interest rate increase over the term, otherwise you will break your neck.

However, I am more concerned about the income and the desire to have children in the early phase. Your liquidity must - especially in the first years - remain totally secure. Even if your wife's equity is temporarily lost.

The bank calculates based on LK tables.

Additionally, you must not go to the limit. We live. Something always comes up. Do significantly less than 350T, as I wrote. Then it can make sense and work sustainably with a future. That is my clear opinion.

So I will express myself more clearly: I consider this originally mentioned financing rather unrealistic and if someone grants it to you, it is quite risky (for you + family).

With 80T of land, have you included all development, purchase, notary, court, and CONSTRUCTION ancillary costs (which are quickly fixed at 20-30T euros depending on the building plot)? Honestly?? If not honest: Let's talk about it. Many get caught by the construction incidental costs. My favorite topic (and I also believe the expert's).

Yes, the building land costs €60 per sqm, with 1100 sqm that makes €66,000. I have to say that it is out in the countryside. Living costs are also lower here than in the city. Yes, maybe you have to save a few sqm on the house to get down to a loan amount of €250-300k. But would it really benefit me that much to build a garage only in 10 years? For that, I would have to take out the money anyway, so I would only save the interest for a few years. And will I get a loan then if the old one is not yet paid off?