Is purchasing a house on that scale feasible?

Hello everyone,

my girlfriend (24) and I (27) are currently still living in a rented apartment and are considering whether we should buy a house.

Now about us:

[*]Do you have children? No
[*]Are children planned? possibly in the next few years
[*]What do you do for a living? Industrial clerks

Income and asset situation:

[*]What income do you have (gross/net)? She 1900 net, he 2100 net (each 13 salaries)
[*]How much equity do you have? Building savings 15,000, rest approx. 10,000 (which should serve as reserves for various things)
[*]How much equity do you want to invest in the house project? 15-20

Costs:

[*]Current cold rent 460 euros
[*]Current warm rent 600 euros
[*]Electricity 60 euros
[*]Phone, internet, mobile with phones 80 euros
[*]Groceries approx. 400 euros
[*]Car financing 350 euros (2.5 years remaining)

Besides these, of course, the usual costs such as insurance, hobbies, ... will still be added. I would estimate that with a total of 1900 euros living expenses, the costs for both of us should be well covered.

An example house that would interest us:
Single-family house built in 1999, 170 sqm including 60 sqm granny flat. Very well maintained condition. Costs: 340,000 euros plus additional costs = 380,000 euros. The equity of approx. 20,000 euros would then be planned for various furnishings and renovations. For the granny flat, one could at least achieve a cold rent of approx. 300-400 euros for the first 10-20 years.

Would that be roughly feasible?
Personally, I could imagine a monthly payment of 1,200€. If the house also had a granny flat, it could at least be included in the financing from time to time.

Thank you very much in advance!

I find it a size too big for you. Sorry. Why wouldn't a smaller house do, what happens financially if you have children?

You do not even have the incidental acquisition costs, and with that, you are then clearly above a 100% financing. This is unhealthy and leads to significant interest surcharges.

What is the current monthly savings rate?

That it is a financing of over 100% is clear to me.
Savings rate currently combined: Bausparen 300, UnionDepot 200, Union Riester 100

That means you would have available for the monthly capital service:

460 euros previous cold rent
300 euros building savings contract
200 euros UnionDepot
100 euros Riester
----
1,060 euros

This does not yet take into account that the ancillary costs (e.g. heating, electricity, insurance, reserves, etc.) will be significantly higher with a house than with the previous apartment. I also don’t believe that 20,000 euros will be enough for various furnishings and renovations. That sounds harsh, but I have to say from experience that those things really add up. Just thinking about lamps + light bulbs, towel rails, curtains, and stuff like that....

I wouldn’t count on or plan for any potential rental income. Why? What do you do in case of rental loss due to tenant change, tenant simply not paying, or you don’t get a tenant from the start? Here you rather need an additional buffer of 5,000 to 10,000 euros to cover such bottlenecks.

1,060 euros in relation to the 380,000 euros amounts to 2.78%. Since your financing is over 100%, from my perspective, you should expect an interest rate over 1% with a reasonable fixed interest period, i.e., your repayment would be significantly under 2%. Or put differently: loan term of over 40 years => collision with retirement entry.

If your girlfriend should become pregnant in the next few years, the whole thing completely falls apart. You would then miss about 650 euros in salary, which is even more than your current savings rate – and that despite a cheap rental apartment.

My tips:

1. Improve income
2. Keep a household budget and optimize expenses
3. Save more equity
4. Once more equity is available, look for a cheaper property