Is the financing so realistic? What is the amount of the financing?

Hello,

I am a 28-year-old male working permanently for an energy supply company. My monthly net salary is €2900 - €3000, and with holiday and Christmas bonuses, my annual gross salary amounts to approximately €60,000. I have tax class 3, meaning I am married and we have a child who is 10 years old. My wife works permanently as an office clerk, but on a daily 6-hour basis. Her monthly net salary is €800 with tax class 5. However, starting January 2015, she will be employed full-time and will also receive a wage classification. Her monthly net income would then be about €1150. At the moment, we still have an outstanding loan, which expires in November 2014. The monthly installment is €600. The rent amounts to €784 including utilities. Otherwise, my wife receives €294 monthly from the father of our daughter (if that should play a role). We both, of course, have a car. In addition, we have each obtained a Schufa credit report. My score is 96.85%, and my wife's is 97.15%. We currently have equity of €14,000, and we save €500 each month.

We want to be completely finished with everything by next summer. Since our daughter is changing from elementary school to secondary school, this would be more than appropriate. This year, we wanted to decide on a plot of land and a developer. Based on the current situation, would we be able to get financing, and what would be the maximum financing amount for us? Can the existing loan be refinanced? Should it be redeemed, which would then have to be taken from the equity.

Thank you in advance for your answers.

Per 100,000 euros, you should expect a 500 rate. But if you don't have a plot of land at the moment, I see it rather pessimistically that you will actually be finished next year. Finding a plot of land usually takes a long time. Then the planning phase also takes longer. And a lot of time passes until construction actually starts. Because building permit applications have to be submitted. Then the developer also has to have time. The weather has to cooperate, and so on... So say goodbye to the idea of being finished next summer if you don't even have a plot of land yet.

Plots of land would theoretically be available, I just wanted a little information beforehand on whether this project would be financially feasible, the selected plots are all fully developed and cost between 60000-75000€. It is also not necessarily essential to be finished with everything by next summer. Primarily, I am concerned about the financing possibility.?

Hello,

with that income, the question arises why there is "only" €14,000 equity. That could already be a problem. Otherwise, regarding the maximum financing amount, I would specifically ask your house bank or a broker. It would also have to be possible to manage the double burden of the loan during the construction phase & rent.

Hello Rico&Nancy,

Your loan will be paid off in November. An early repayment makes little sense in my opinion. You would pay advance interest - which can be saved.
Moreover, a paid-off loan has a positive effect on the Schufa rating (however, I do not know when it is reported and updated)..

Since a planning phase takes quite a long time (for us > 1 year), I will factor in the freed-up monthly installment:
You have (from November) free capital available monthly:
600 euros (free loan installment)
600 euros cold rent (I assume 184 euros additional costs)
500 euros monthly savings rate

Thus, you would have 1,700 euros per month available for your financing. You should budget additional costs for the house at 1.50 - 2.00 euros. That means a lump sum of, for example, 150 m² would be 225 - 300 euros. You subtract this from the 1,700 euros (but you can offset your apartment additional costs here).

1,700 € - 150 € = 1,550 euros

This would be your maximum saving/loan installment at time X. According to the information from Koempy mentioned above, a flat 500 euros monthly installment / 100,000 loan can be assumed (= 6 % annuity). Thus, you could theoretically take out approximately 300,000 euros in loans.

BUT: Then you completely expose yourselves. You have no reserves left and will not build any for the time being.
If something breaks away from you (e.g. maintenance payments for your daughter) it would become very tight. In addition, other costs may change (e.g. travel costs to work, if previously living in the city and in the future outside the city; etc.)

Personally, I have some concerns. You have very little equity (just enough for the additional costs when buying the plot). The situation will ease somewhat if Nancy works full-time.
You will find a bank that finances you. But it could be tight.

First, calmly look for a plot and plan the house in peace in parallel. Then you will see how high the financing need is. Save purposefully during this time.

Hello,

with that income, the question arises why there is "only" €14,000 in equity. That could already be a problem. Otherwise, regarding the maximum financing amount, I would specifically ask your house bank or a broker. You would also have to be able to handle the double burden of a loan during the construction phase and rent.

We just lived very well, took 2-3 vacations a year. ;-)