Land purchased. Can I afford a house?

Hello everyone. I would appreciate advice from you.

I have a paid plot of land worth 50,000€.

In the next 2 years, my girlfriend and I will manage to save another 50,000€.

We have imagined a 120 sqm house. The house should not cost more than 150,000Euro.

Our idea now was that we would need a loan of 120,000Euro, after all, the house also needs to be equipped with a fireplace, kitchen, etc...

Is that correct? Or have I overlooked something?

At the moment, I earn 1500Euro net and my girlfriend 1200Euro net monthly. So together 2700Euro net. But tending to increase as I will finish my electrical engineering studies in 2 years.

How do you manage to save 50,000 in 2 years with a net income of 2700? That would be a monthly savings of almost 2000 €.

A house for 150,000... I consider that unrealistic. Have you taken into account the [Baunebenkosten]? Usually, that is between 25,000 and 35,000. You also still need money for kitchen, paving the yard, outdoor facilities, etc... already included?

My rough estimate is that 2700 can work. But first you have to clarify how much of the salary is available for financing now. Never count on money you don't have yet.

But maybe you just wait the 2 years until you are finished and have a permanent job, etc.

How do you manage to save 50,000 in 2 years on 2700 net? That would be a monthly saving of almost 2000 €.

A house for 150,000... I find that unrealistic. Have you taken the additional construction costs into account? Usually, these are between 25,000 and 35,000. You also need money for the kitchen, paving the yard, landscaping, etc... have you already included that?

My rough estimate is that 2700 could work. But first, you need to clarify how much of that salary is actually available for financing now. Never count on money you don't have yet.

But maybe you just wait the 2 years until you are finished and have a permanent job, etc.

Sorry... I should have mentioned that I still live at home and don’t have to pay rent, food, or anything else. I also have a permanent job as I attend evening classes and work during the day like everyone else. Only that way can I save the targeted 50,000 euros. The additional construction costs should also be limited since my parents have a construction company and will carry out the earthworks and paving for me. My estimated additional construction costs amount to about 5,000 euros.

Just the connection costs for electricity etc. will eat up this amount.

Your parents give you cash, dispose of the excavation for you, pay for your construction electricity etc.? You also have to buy rainwater pipes, paving stones aren’t free either. Surveyors and soil reports also need to be paid. The chimney sweep wants money too... all these items drive up the ancillary building costs.

I’m writing all this because I want to point out positions you might not think of at the beginning. We buy a house for 190,000. Now we are almost at 280,000 because of ancillary building costs, kitchen, garage, paving work etc.... this surrounding stuff shouldn’t be neglected.

Purely from net salary you should be able to manage a 1% repayment of a 200,000€ loan. But what happens if the construction becomes more expensive? Children planned? Your net income will never be enough for the financing, and if your girlfriend (does she also live with your parents?) should become pregnant, you are stuck with 2000 net.

These are all points you have to consider.

Okay... I realize now that 5,000 euros was probably too low. Of course I will get the building materials cheaper and not for free. But we can contribute a lot of work ourselves like the earthworks, paving, etc. And since I am a trained electrician for energy and building technology, I can wire my house myself and save some money again.

How much money does one have to have saved nowadays to comfortably pay off a house?!

I think we’d rather save for 4 years instead of just 2 and play it safe. Paid-for land and 100,000 euros in equity should then be sufficient as a down payment for a small 120 sqm house to comfortably pay off the loan.

I think we'd better save for 4 years instead of just 2 and play it safe.

That's definitely the best!

By then it will also be clear what you'll earn after your studies and where you'll be working... you probably don't want to continue working as an electrician for 1500, right?

Regardless of that: if you still live with your parents, does your girlfriend live with you? Because building a house together without having lived together for a longer time is quite adventurous.
That way you also currently have no sense of all the additional costs (electricity, water, insurance, food, phone, internet, etc... since your parents are currently paying all that for you... several hundred euros add up that you currently don’t have on your radar...

And never forget that you might want children someday... then your girlfriend’s income will disappear and your expenses will increase significantly at the same time...
The question is also whether you’ll be happy with 120m²...
120m² is quite spacious for two... okay for three, but for four it’s starting to get a bit tight... Unless there is a basement that can be used as living space...
Depending on family planning, you might want to plan a bit bigger (and maybe save for 1 year longer...)

We do not live together yet.

120sqm is more than enough... my parents also have only a (ein) 120sqm house and it is absolutely sufficient. I also don't want to have a bigger one myself. Bigger means more expensive, higher energy costs, and it is too big in old age. I consider 120sqm perfect.