Is the financing volume for our construction project realistic?

  • Erstellt am 2021-05-01 08:44:33

Hausbauer4747

2021-05-01 08:44:33
  • #1
Good morning everyone,

we have purchased a plot of land and are currently calculating to what extent we can implement a construction project. We would greatly appreciate assessments and tips on this!

General information about you:

    [*]Who are you? Two adults, in a few weeks three children.
    [*]How old are you? 39 and 37
    [*]Are there children? Yes, 2, 1 and soon 0 years old
    [*]Are children planned? No
    [*]What do you do professionally? Managing director (without company shares, permanent employment contract) and saleswoman
    [*]How many hours do you work? Both full-time, my partner’s work was interrupted by one year of parental leave until June 2022. During this time, the net income decreases to about 7,500 euros per month. My partner was also able to work full-time for a few months with two small children until the maternity leave of the third child; her job is very flexible. The reflex is of course also “full-time with three small children – no chance” for us, but a few months at least with two small children worked quite well.

Income and asset situation:

    [*]What income do you have (gross/net)? Approximately 9,100 euros net per month including child benefits and annually between 10,000 and 25,000 euros net variable components.
    [*]How much equity do you have? 120,000 euros.
    [*]How much equity do you want to put into the house project? 120,000 euros, because we are fortunate to have a good surplus in the household budget and can continue saving.

Expenditure situation:

Housing costs:


    [*]Current cold rent 1,580 euros
    [*]Current warm rent including all additional costs including electricity, heating, and internet approx. 2,200 euros. The additional costs are quite high, but include costs that will later fall away (full winter service, gardener for front garden and hedge trimming).

Mobility costs:

    [*]Vehicle 1: Our main vehicle is a company car, whose costs including fuel are fully covered by the employer also for private use; taxation is already included in the above-mentioned salary.
    [*]Vehicle 2: A second car (no financing rate, value approx. 14,000 euros, which however was not taken into account in the above equity), which still has a manufacturer’s warranty for just over two years. Insurance and tax approx. 350 euros per year, fuel about 60 euros per month. My partner also had a company car until the first child, which was fully paid by the employer; probably the self-financed second car will be dropped in favor of a company car again in the next few years.

Insurance costs:

    [*]Insurances approx. 300 euros per year for the second car (see above under vehicles) and approx. 1,000 euros per year for other insurances, e.g. liability, household contents, term life, and legal protection.

Living expenses:

    [*]Groceries: This is quite hard to estimate, including kindergarten fees, which are currently expensive with small children, we estimate living costs of about 2,200 euros per month.
    [*]There are no other expenses; we have no loans, financing, maintenance, etc.

Total income and expenses:

    [*]Total income: currently about 7,500 euros
    [*]Total expenses: currently about 4,500 euros
    [*]Balance +3,000 euros
    [*]Of that, sum of cold rent and dispensable savings (e.g. savings rate for house): if you subtract current cold rent and another 50 euros for gardener and winter service from the costs, the balance rises to about +4,630 euros per month. I do not calculate one-time annual costs such as insurance or holidays; I rather offset these with annual special payments.

Total income and expenses after parental leave and move into the house (during 2022):

    [*]Total income: about 9,100 euros
    [*]Expenses with three children then total: about 2,500 euros living costs and 500 euros additional costs
    [*]Balance +6,100 euros
    [*]The credit installment would then have to be deducted; we would like to aim for about a 3,000 euro monthly rate. That would then leave a balance of about +3,100 euros per month.

General information about the property:

    [*]How big is the plot? 2,600 m²
    [*]What are its dimensions? approx. 38x75 meters, it gets a bit narrower towards the back in the garden (to approx. 28m)
    [*]What is the land value? approx. 95 euros
    [*]New building, old building (year built), house type? New building
    [*]Garages? Not yet decided, if possible a 6x9m precast concrete garage
    [*]How big is the house? (living area / usable area) Not yet decided, 180-200 m²
    [*]What is the market value of the plot and house after completion? This is a very interesting and important question, but unfortunately I do not yet have a proper answer.

Construction or purchase costs:

    [*]Plot costs including development and ancillary acquisition costs: 290,000 euros
    [*]Construction or purchase costs (including architect, structural engineer): estimate 515,000 euros (including 15,000 euros buffer for fittings), basement is rather not planned
    [*]Additional construction costs (e.g. house connections, soil expert, construction power etc.): estimate 60,000 euros
    [*]Outdoor facilities/terrace, paths, garden design, fences etc.: estimate 170,000 euros including garage, carport element, terrace, fences, etc.
    [*]Total costs approx. 1,050,000 euros

Other costs:

    [*]Kitchen costs: we estimate 15,000 euros
    [*]Furniture, lamps, decoration: We will mainly plan a new dining table with chairs; otherwise we hardly need furniture. We will cover that from our current salary and not finance it.

Cost breakdown:

    [*]Total costs: 1,050,000 euros
    [*]Deductible equity: We can save more in the next few months, therefore 150,000 euros
    [*]Financing amount: 900,000 euros

Necessary credit information:
We are still determining the total costs and have received positive feedback from banks and credit brokers. The details of the financing are not yet finalized because the house itself is still a cost variable. That is exactly my concern; we would like to get an external perspective on whether a 500,000 euro house and the total volume are possible or if we should plan something smaller.

As mentioned, we aim for about a 3,000 euro rate per month; I would like to have the financing paid off by retirement in 27 years. We also want to include 5,000 - 10,000 euros per year from our special payments for that.

That was a lot of text, but we would be very happy if someone takes the trouble to read everything and give us an assessment. Thank you!
 

Hausbautraum20

2021-05-01 10:09:08
  • #2
So 170k for outdoor facilities sounds extreme if there is no steep slope.

- 30k double garage
- 15k paving paths and terrace (decent quality)
- 5k house entrance
- 15k terrace roof
- 15k paving larger driveway
- 10k fence and garden
= 90k

That would reduce your financing amount to 820k, which I would consider doable for you now. 900k would be too much for me considering your high income in relation to your age. The 3 children will be more expensive, and full-time in primary school age might be rather more difficult than easier compared to the nursery age.

Otherwise, your question is of course "funny" overall. If with an income of over 7k net you can no longer build a house at a cheap standard land value, then I don't know either. We have 5k net and manage it with a land value of 1000€/sqm (however, our plot is of course correspondingly smaller, so we again only end up with the same land costs...)
 

blackm88

2021-05-01 11:21:15
  • #3
So with just under 10k net/month, a nice house is definitely within the budget. What slightly confuses me are the conditions (170k for garden and 15k for kitchen), ...
 

bowbow91

2021-05-01 15:54:55
  • #4


The payment seems fine to me; you will be through by retirement.

The payment is of course quite high (compared to the average). That’s okay since there is a good income. It is up to you to assess how secure the income will be over the next 27 years.

I have to admit that I don’t like the ratio of land + landscaping costs to house costs at all. If you ever get into financial difficulties, your garden will be to blame... Maybe you could tell something about the specific building project, then it can be better assessed overall.
 

aero2016

2021-05-01 16:18:56
  • #5
Your cost breakdown somehow doesn’t add up. For the house, I find 500k€ clearly too low, 15k€ for the upgrade as well. 15k€ for the kitchen is also not enough. But 170k€ for the outdoor facilities seems high in comparison. Of course, that also depends on the condition of the property. With that size, it can add up if it still needs clearing and leveling. Or fencing. Full-time with 3 children works very well if both parents can work flexibly and ideally extensive childcare is provided, e.g. by a nanny or AuPair. But that also means a corresponding amount of money per month. I find the loan amount overall too high for your income.
 

Hausbauer4747

2021-05-01 17:46:43
  • #6
Thank you very much for the assessments so far!





I might have been a bit imprecise about the garden, also in distinction from the exterior work. I currently estimate as follows:
- Garage with foundation 25,000 euros
- Carport roof (mounted on house wall and garage, without foot supports) 5,500 euros
- Paving driveway 80 m² 9,000 euros
- Porch at the house 5,000 euros
- Terrace 110 m² with base (ideally a concrete slab) 17,000 euros
- Sturdy garden fence 120 cm high, about 200 meters long, 20,000 euros
- Sowing lawn about 1,500 m² 7,000 euros
- Hedge 8,000 euros
- Rainwater cistern 5,000 euros
- Pool including installation 55,000 euros
- Simple wooden stable for up to two horses (this is a requirement to acquire the property) 10,000 euros
- plus just under 5,000 euros as a buffer. Probably it will also be about 6,000 euros for garden irrigation and a robotic lawnmower, but I will cover that from current income and buy it next winter when I find a good offer.

Lawn, fence, and hedge are based on estimates from various landscaping companies; the values for paving work come from various websites and configurators, including from hardware stores. The pool naturally drives the total sum significantly; that would be a candidate to cut if the budget elsewhere turns out too large. We already had a pool for three years in a rental property and would like to do that again—if possible.



The plot is absolutely flat, but the garden fence is significantly more expensive than initially assumed if you want double-wire mesh panels, which we will probably need because of our dogs.


Are there any thumb rules for that? I think I heard something about a hundred times the net salary?

Do you consider 515,000 euros just for the house (without kitchen) unrealistic? With 200 m² that would be 2,575 euros per m²; I thought that wouldn’t be underestimated. If you say that, for example, nothing under 3,000 euros per m² works, I obviously have to start cutting, pool, garage, or something like that.

On the other hand, even with my partner’s significantly reduced income last year due to parental leave, we were able to live normally and still had a monthly household surplus of 2,600 to 3,000 euros.
 

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