Land purchase of 319 sqm for 191,000 euros and house construction realistic?

Hello everyone,

we plan to purchase a plot of land in the Aschaffenburg area for 191,000 euros. Currently, we are not sure if this will all be feasible in the end with children, etc. According to a financial advisor, this is no problem at all. However, I am not so sure, so we need another assessment.

If we both continue working full-time, it would be no problem. At the latest when the first child arrives, my wife wants to take parental leave for 1 year and then work 21 hours per week. This reduces our household income to about 4,700 euros, excluding possible salary increases. The possible installment would shrink from 2,650 euros currently without a child and full-time work to 1,500 euros since I also have to calculate food costs for 3 people.

The best offer would give me an interest rate of 3.23%, which means I would be finished in 44 years with a rate of 1,550 euros.

Are the costs for the house realistic?
Have I forgotten to consider something?
Or is it all basically feasible?

Data about the plot:

319 sqm
House: semi-detached house
Building window: 14 x 8 m
Number of floors: required 2 full floors
Roof shape: gable roof, shed roof, flat roof, and recessed floor
Floor area ratio 0.4
Solar system mandatory at least 3.5 kW peak
Excavation class in the area 3 to 4

The development of the plot will be completed in December 2024. Construction can therefore start at the earliest in 2025.
Costs for the development do not apply, as they are already included in the purchase price.

Planned for the house:

135 sqm with 5 rooms on a slab foundation
Own work would definitely be doable: filling and sanding, painting, wallpapering, laying floors and tiles. Later on, paving, etc.
Underfloor heating could theoretically be installed (my uncle is a heating technician)

General info about you:
How old are you?
He 31 / She 31 married

Are there children?
No

Are children planned?
Yes 1-2 children

What do you do for a living?
He employed in purchasing 35 h / She employed as a legal secretary 32 h

Income and asset situation:
What income do you have (gross/net)?
He 3,100 euros net / She 2,700 net = household net total 5,800 euros

How much equity do you have?
We have 240,000 euros available + currently 37,500 euros in Riester (28,500 euros if I dissolve the Riester, as I would have to repay subsidies) + about 25,000 euros savings in 2024

How much equity do you want to invest in the house project?
235,000 euros + 28,500 euros Riester into house/plot, 15,000 kitchen, and 15,000 euros reserve for emergencies etc.

	per month
Total income	6,050.00 €
Total expenses	3,391.75 €
Balance	2,658.25 €
Income
Salary	5,800.00 €
Child benefit	250 €
Fixed expenses
Mobility
Car insurance	40.13 €
Car tax	13.50 €
Maintenance	25.00 €
TÜV (vehicle inspection)	7.00 €
Repairs	14.58 €
Tires	17.00 €
Fuel	200.00 €
Public transportation	250.00 €
ACE motor club	12.00 €
Insurances/Bank
Travel health insurance	2.00 €
Liability insurance	10.00 €
Occupational disability	170.00 €
Dental supplementary insurance	14.40 €
Pension (Volkswohl Bund)	54.00 €
IG Metall	35.00 €
Account maintenance fee	9.00 €
Telephone/Internet
Mobile contract	17.00 €
Broadcasting fee	18.36 €
Landline/DSL	38.89 €
House/Rent
Electricity	150.00 €
Property tax	45.00 €
Waste disposal fees	25.00 €
Water	60.00 €
Heating costs (electricity)	130.00 €
Heating maintenance	25.00 €
Insurances	50.00 €
Maintenance reserve	140.00 €
Street cleaning	30.00 €
Miscellaneous
Haircuts	80.00 €
Kindergarten	paid by employer
Variable expenses
Subscriptions
Netflix	12.99 €
Amazon Prime	5.90 €
Food / drugstore/medications
Other	490.00 €
Pharmacy	100.00 €
Leisure
Purchases	150.00 €
Vacation	200.00 €
Clothing	150.00 €
Other (restaurant, swimming pool, cinema, etc.)	600.00 €

Here is my rough cost plan for the house currently. Many values are from the internet.

Plot price			191,000€
Property tax Bavaria	3.50%		6,685€
Notary	1.50%		2,865€
Land registry entry	0.50%		955€
Broker			0€
Costs plot			201,505€
Additional construction costs
Building permit	1%		4,050€
Building contract review			1,500€
Structural engineer			4,000€
Survey			2,500€
Soil report			2,000€
Construction water			2,000€
Construction electricity			4,000€
Earthworks			15,000€
Development electricity water internet			10,000€
Builder's liability insurance			200€
Construction performance insurance			900€
Architect			6,000€
Construction road			700€
Construction interest
Additional costs			52,850€
House
Construction costs per sqm	3,000€	135 sqm	405,000€
Photovoltaic system and storage			12,000€
Buffer	10%		35,000€
Parking space			2,000€
Terrace			5,000€
Garden			2,000€
Fence			2,000€
Own work	5%		20,250€
Construction costs			442,750€
Total costs			697,105€
Equity			235,000€
Riester pension			28,500€
Loan			433,605€

Thank you very much for your support.

This is a tight pair of panties. I would trust myself with the small installment (and mini repayment). But it has to be clear that two jobs will always be necessary. Children are expensive (I have three myself...). Discipline is required. And not much should happen. Already live as you later would and set aside all surpluses. Maybe you can also put a small financing module – depending on the planned time of the offspring – on a very short fixed interest period and fully repay it in a few years.

Otherwise, I would also like to know the fixed interest period of the financing. That is the point that can break your neck. After 10 years, for example, approximately €433k still has about €385k left (roughly estimated with a bit over 1% repayment). With a follow-up interest rate of, for example, 7%, the rate increases brutally – doubling to be exact.

If the house gets more expensive, that’s also bad. A lot can go wrong, but it doesn’t have to.

As an alternative, I recommend a classic developer measure. From one of the usual suspects like Traumhaus (too bad, they are insolvent), Deutsche Reihenhaus or similar. Or an existing property, where the cost calculation is also fixed.

According to the financial advisor, that’s all no problem.

Technically, he is right. With your income figures you can manage the €1,500 financing easily. But the "financial advisor" is also just a salesperson. You only interest him until the contract is signed. Your life afterwards – oops, there are twins right away, child care costs from the first year of life were not foreseeable at all... – doesn’t interest him at all. Your planning doesn’t either. Good that your feeling makes you ask here.

I am not a financial expert but when I read that you want to pay off over 44 years, it makes my hairs stand on end. Then you would be 75. That can't be serious, can it?

I am not a financial expert but when I read that you want to pay off over 44 years, it raises the hairs on the back of my neck. Then you would be 75. That can’t be serious, can it?

Why? Does it also raise the hairs on the back of your neck when the tenant still has to pay his €1,800 cold rent at 85 and is never done? It is first of all always a question of proportionality and secondly just a calculated date. You have to deal with that. A plan can be, for example, after the first fixed interest period in 10 years, when the child or children are normally in school, both work reasonably normally and salary increases have been made, to adjust the repayment during a prolongation (provided that a rise in interest rates does not break the neck). Just 1% more repayment after 10 years shortens the term to about 35 years – the loan would thus be paid off by retirement. Or you decide at 60 that you prefer to have a small remaining installment for a long time and rather spend your income on other nice things. Then you finance approx. €90,000 at age 60. With an assumed annuity of 7%, that’s €350 per month. So what? Please don’t always immediately scream when young people take out financing with 1% repayment and a long term, as was usual in the past. That means absolutely nothing initially and the term is just a bare number. P.S. I took out my last private construction financing at 48 with a calculated term of 40 years. And I can sleep very well with it.

I don’t see your financing as critically as you do. It is certainly much more realistic and less risky than that of high earners who like to take on a tight million-euro loan.

Why?

a) You have already built up a good amount of equity. That also means that you are capable of living frugally (I haven’t looked at your household budget, but the aggregated numbers are sufficient for assessment) and therefore you don’t have to severely restrict yourselves with a house and children.

b) You both work quite little. Naysayers would say you both work part-time. This means you don’t have to work much less even with a child (for the first years with children you have enough reserves to get by on just one salary).

c) Thanks to income splitting for spouses, your husband’s income will noticeably increase during your parental leave and you will be insured free of charge. The drop from the status quo is therefore somewhat gentler than it appears at first glance. You are married, right? If not: get to it.

d) This connects to b). The older the children get, the more your wife can work again. Since she already works 80% and you about 90% (if I assume 40 hours as standard), the current status (+ child benefit) is not unrealistic with school-age children. Especially you can actively contribute 35 hours to upbringing — many high-earning fathers can’t do that. This then allows either extra payments or increasing the repayment rate for refinancing, so it doesn’t have to stay at 40 years duration and you’ll be comfortably done by retirement.

e) You have relatively balanced incomes. Both fairly solid, but not top tier. That means a job loss won’t completely ruin you and you have a chance to earn at least a similar amount in a new job. The fall is less steep and the woman can more easily replace the man, who then can work part-time instead. From a risk perspective, that’s already advantageous.

f) The rent of a family-suitable house/apartment will very quickly exceed your house payment. You then also have to be able to pay that. Of course, you would have your savings, which would then already be tied up in the house and could, for example, generate dividends. But you can’t live in your stock portfolio and provide a home for the children.

Finally a tip: better fix for 20 years, that reduces the interest rate change risk considerably. You can still cancel after 10 years if interest rates fall in the meantime. Sure, that’s a bit more expensive, but it would be worth the security for me. Instead, just save yourself the surcharge for special termination and invest surpluses in stocks. Even if you don’t cancel the loan after 10 years, you can still use the saved capital together with accumulated assets to take out a nominally higher loan installment (probably lower in real terms than today) for refinancing so that you’ll still be done after 10 and therefore in total after 30 years.

Everyone who has never been in a pharmacy and therefore does not list such an item (pharmacy is used as an example) can take an example from your fixed cost breakdown. A lot of realistic obligations have really been considered.