Land is in sight - Financing feasible?

Hello everyone,

I am new to the forum and have so far mostly read quietly during my information gathering. With the birth of our second child, our apartment in Frankfurt is becoming too small for my husband and me, and we want to leave the city for a house of our own.

We searched for a long time for an existing property, which is very difficult in the Rhein-Main area at the moment. Hence the decision to build ourselves.

Some things about us:
We are both 30 years old and I earn about €2850 net in a secure job while my husband is a homemaker. Unfortunately, due to past commitments abroad, we only have about €10,000 saved as equity. We currently pay a rent of about €990 (cold). Our repayment should stay within that range to still have enough left for living expenses, retirement savings, and the children.

We could get a plot for around €140,000 in a good location. We want to keep the house (we have not yet decided whether prefabricated or solid construction) as cheap as possible through as much own work as possible (craftsmen in our circle of acquaintances, etc.). We imagine roughly 4 rooms with at least 100 sqm of living space.

Is that realistic, or do you think we should just leave the dream of a house as a dream? I just thought I’d ask the experts here before I waste a lot of time and energy...

Many thanks.
Sonja

Hello Sonja,

The following about us:

Others who are knowledgeable in this area; if not even working in it, will comment here regarding your financing options. I can, however, give you some guidance on the necessary budget.

We could get a plot of land for around 140,000 EUR in a good location. We want to keep a house (we haven’t yet decided whether prefabricated or solid construction) as cheap as possible through as much personal contribution as possible (craftsmen among acquaintances, etc.). We are thinking of ~4 rooms with at least 100 sqm of living space.

100 sqm seems too small to me; everyone in the house should feel comfortable; in my opinion, it should rather be 120 to 130 sqm.

Such a house currently costs turnkey on slab foundation: TEUR 195
Prefabricated garage 3 x 9; incl. sectional door and strip foundations: TEUR 12
Plot: TEUR 140
Additional construction costs: TEUR 40
Painting/flooring as personal contribution: TEUR 20
Outdoor facilities as personal contribution: TEUR 10 (only the essentials)
Reserves for extras: TEUR 10

This results in an all-in investment of TEUR 427

“Craftsmen” among friends are not available for free; materials must be paid for, acquaintances compensated/insured/fed. It is often also the case that acquaintances are quick to verbally commit but frequently retreat in reality because their private free time is severely restricted over a longer period. Therefore, in your place, I would first critically question the willingness of your acquaintances ;)

HTH

Rhenish greetings

My husband and I will find our apartment in Frankfurt too small with the birth of our 2nd child, and we want to move out of the city into a house of our own. We are both 30 years old, and I earn about €2850 net in a secure job, while my husband is a househusband. Unfortunately, due to past commitments abroad, we only have about €10,000 saved as equity. We currently pay rent of about €990 (cold rent). Our repayment should then also stay within this range.

100 sqm seems too small to me; everyone in the house should feel comfortable; in my opinion, it should be 120 to 130 sqm. Such a house currently costs turnkey on a slab: €195,000 Garage 3 x 9; including sectional door and strip foundations: €12,000 Plot: €140,000 Additional construction costs: €40,000 Painting/flooring in DIY: €20,000 Outdoor facilities in DIY: €10,000 (only the essentials) Reserves for extras: €10,000 This results in a total investment of €427,000 "Craftsmen" in the circle of friends are not available for free; materials must be paid for, acquaintances must be compensated/insured/served. It is often the case that acquaintances are quick to say yes but in reality often withdraw because their private leisure time is extremely restricted over a longer period. Therefore, in your place, I would initially question the willingness of acquaintances critically ;)

Honestly: forget it. I'll take the figure from and round it down a bit to make calculations easier. €400,000 at an average interest rate of 2.5% (you would be 100% financed) and a repayment rate of ONLY 2.00%. €400,000 x 4.5% = €18,000 p.a. annuity = €1,500 p.m. Since we completed our financing, I no longer know the current interest rates. From what I've read, the assumed 2.5% for full financing should still be very good. At 2% repayment, you would probably pay for 35-40 years. Therefore, a higher average repayment is advisable. My recommendation: postpone the project until your husband goes back to work (I assume he is with the child). With the current plan, you would be taking on way too much.

If you extrapolate the episode numbers, €427,000 at an annuity of about 5% means a monthly payment of about €1,780. In addition, there are extra expenses for the house, so you can expect a monthly burden of around €2,000. That will probably remain a dream.

Then I'll say something about the financing:

No, I wouldn't do it.

Why? According to Epi's calculation, you need to finance T€ 417, let it be less because of EL.
A quick calculation example: a loan of T€ 350 at 2% interest and 2% repayment (then you are done with the pension) costs you €1,167 monthly. In addition, there are ancillary costs for the house, €350 monthly (assumed). So we are already at €1,517 per month. Additionally, living expenses for four people come up to you, what about car, insurance, retirement provision, "luxury" like vacation, etc.

If the interest rates are higher or you have to finance more, the calculation always shifts further against you.

Questions:
Child benefit already taken into account?
Is it also possible with a cheaper plot of land (somewhat rural, or maybe a semi-detached house from a developer project)?
Is your husband going back to work?

I was too slow :(:(:(