Loan amount - What is achievable?

Okay, here it always refers to the amount of debt in relation to income.

But you should always look at the ratio of debt to value...

Immo1 debt just under 120k, value approx. 120k
Immo2 debt around 65k, value 160k
Land debt 40k, value approx. 120k
Possible house debt 400k, value with land > 500k

In this respect, I don't really see what is unhealthy...

Also, when assessing the amount of debt, you shouldn't only count the earned income, but also the total cash flow.

In my opinion, it looks like this here:
Total debt 625k to 5,100 monthly income
From this, 145 + 300 + probably 1,500 euros for house and land go away.
That leaves 3,155 monthly for living.

Not taken into account here is that we both receive a 13th salary, that due to a deliberately rather unfavorable tax class combination we get some money back from taxes or do not have to pay as much because of rental income, that both are still in the lower salary range due to the levels in the collective agreement, and finally a mature building savings contract with 100k, where 50k own funds are in it (apart from emergency savings/stocks).

Every asset is worth more than the debts on it.
Sure, it could be that real estate prices plummet, but a strong inflation could also occur, then your money in the savings account is worth nothing anymore.
And prices would have to fall quite massively for me to make a loss on sale here.

So why is what I do not healthy?

Don't get me wrong, this is not supposed to be an attack.
But I have been thinking intensively these days, and I can't think of any case where I would really be ruined?

Maybe I'm overlooking something. Thanks!

Alternatively, I could sell both apartments and pay off the loans. That would give me equity of 95k + 50k [Bausparer]. That means I would have a total of 145k.

Then I would have to borrow 440k - 145k = 295k for the house including the land. At 1.8% interest and 4% repayment, that would be about 1,400 euros per month. That means I would have 2,400 left for sticking and after 20 years "only" a paid-off house.

Would that be better?

So first of all, I have been and am skeptical about the construct with the apartments, simply because I find it difficult to understand the exact figures here. Nevertheless, some things have become clearer and are now understandable through your answers. Example: Topic of the parents' land charge: Absolutely understandable now. Below I will also explain in a calculation why I am skeptical, but why I also think it could work.

The simpler case at the beginning: As you suggested at the end, you could sell the apartments. 295k loan, with 5% annuity the rate is still a bit lower, good equity ratio, good ratio of net income. In 20 years or faster, due to growing incomes, you will be done. Check.

This is the risk-free "family variant."

Now the thing with the apartments. Here is my skeptical calculation: As far as I have read correctly, the CF of the previously owner-occupied apartment (Immo2) after really everything (taxes, maintenance, etc., really everything) is 400€. For apartment 1 I assume 100€.

That makes 3800 + 500 = 4300. For a 440k loan, 5% annuity is 1800. Let’s assume 140m2, 1.5€ per m2 ancillary costs + 1€ per m2 maintenance = 2150 or in other words 50% of the freely available net income for housing. I find that quite high. I also find it problematic that there is hardly any buffer. If there are costs in the five-figure range due to unplanned maintenance, the air will quickly become tight here.

The question is: Is a loan of 440k needed at all? My basic problem: I don’t fully understand. Is the intended house price 520k? Consisting of 120k land + 400k house? If I assume that and add 80k (equity portion land) + 80 other equity, then I only see a loan of 360k here. 5% annuity would then be 1500. If you go with 1400 to 1450 as a rate, the situation already looks much better than in my skeptical calculation. Then it works!

Could you perhaps still get a kind of family loan replacing equity in the amount of 50k? Then it would, of course, look even better.

That is why here is the request to recalculate the whole thing at least 5 times with a sharp pencil. You have assessed the risks of your two properties yourself well.

The following may sound strange at first because of my previous contribution, but if it works I would definitely pursue the variant with the apartments.

You have 2 properties that both generate a positive CF, and on top of that already a plot of land. Top! Top! Basically two aces. I would not give up this advantage lightly. Therefore, if necessary, calculate 10 times how and if it can be realized. But please calculate seriously.

Michael, do you already have an appointment with your financing bank? Maybe you can report how they assess the situation. I would find that very interesting.

Hello everyone,

I'm reaching out again because I have since had a consultation at a local bank.
There I was told that our financial situation looks very good from their perspective, and that there is nothing standing in the way of financing the construction project (in the range of 400 to 450 k for the house without the land).

The following points were seen positively:
*The land is already paid off and represents a considerable security
*Both apartments generate monthly income, the installment is very low, the remaining debt is manageable, and renting out is absolutely not a problem
*The apartments are burdened with a low mortgage, so there is still security there as well

However, I now have an idea why selling the apartments could still be worthwhile.
Namely, we would not receive any [Baukindergeld] for our house (2 children present) nor any Bavarian
[Baukindergeld], since it would not be our first home.

My question now is how it would behave if we sold the apartments and thus no longer had a home of our own? Would we receive the subsidy if we then only applied for the building permit afterwards?

Since that would be another 30 k on top, it might actually make sense.

Thanks in advance for the feedback.

Thank you for your feedback after such a long time.

Regarding your question: The first sentence of the KfW leaflet on Baukindergeld states: "Grant for the first acquisition of owner-occupied residential property for families with children from federal funds."

You are currently even living in your own property. No, it does not work.