New Construction Lower Bavaria - Can we afford this?

Hello everyone,

my wife and I are currently planning a new build in a development area near us (still being developed).

Here are some details about us:

M33, W30, 1 child (4 years), family planning complete.
Both permanently employed, household net income about 4500-5000 (varies a bit since M33 works shifts).
Equity 150,000 euros, land already owned and paid for.
Estimated construction costs about 400,000 to 450,000 excluding landscaping.
Also own an additional property (debt-free) which would then be sold, the proceeds should mostly go into special repayment of the construction loan, and pay for the landscaping of the new build.

Hope I didn’t forget anything relevant. Now please your assessments, this should work, right?
Best regards

You forgot the essential part. How much credit remains after selling the existing property? By the way, for significant amounts, you don’t make special repayments. They are way too expensive (a simple special repayment of 5-10% of the loan amount per year already costs a few points in the terms, large amounts can also come with a 0.20-0.50% surcharge). You simply take out a normal long-term loan and, additionally, a bridging loan until the sale. You can then repay that free of charge.

If we calculate 300k loan (with 400-450k it will "only" be a small house, because in addition to construction costs, ancillary building costs, internal development, etc. must also be paid), that is 1,400€ with small repayment. No problem from the bank’s side. Also no problem with a normal lifestyle. Whether you spend excessively is up to you to decide (with 3,000€ +X you can at least live comfortably). With special repayments the rate naturally decreases.

Let’s take a standard house with 125sqm, construction and financing are a "no-brainer." At 140sqm it gets tight. 160sqm are to be placed in the realm of dreams with the budget.

Something off the shelf like that, plus a few wishes, earthworks/ancillary building costs, and the budget is gone. There is no cellar as such. Garage probably only if you reach the budget ceiling.

Special repayment because we currently still live in the additional property ourselves. Therefore, sale is only possible once we have moved into the new building. A 1.5-story single-family house, approximately 140 square meters with a double garage, is planned. How is a "Zwischenfinanzierung" to be understood? This is the first time I have heard of it. Thanks in advance for the answer

Special repayment for the reason that we currently still occupy the additional property ourselves. Therefore, a sale is only possible once we have moved into the new building.

I understand that already. Nevertheless, this is not solved by - expensively paid - special repayments. Depending on the bank, you may not even be offered more than 5-10% p.a. For this, there are bridge loans.
Or you sell the house already now and agree on a usage compensation in the purchase contract (not rent, because otherwise tenancy law applies). Then you already have the necessary equity now and don't have to deal with financing issues at all.
Yes, that is a completely normal and common option. If your current house is not a "dump," many buyers are willing to do that. I know from my own experience (done twice) and from my job (I am a real estate financier).

How is a "bridge loan" to be understood?

Literally. A financing "in between." Between the need for money/start of construction and the sale of your own property. It can either have a variable interest rate or you make a fixed interest rate for 12/18/21 months or similar. In the meantime, you only pay interest, no principal repayment. Repayment in one sum after the "in between," i.e. when the money from the sale is available. This is also routine business for banks.

Planned is a 1.5-storey single-family house, approx. 140 square meters with a double garage.

Typical construction costs are around +/- €3,000/sqm of living space. Plus ancillary construction costs, garage, driveway, terrace.

So if you plan classically through an architect and then have it built - so no off-the-shelf house - and do not contribute any special own work, the house could fail on the budget (or at least that is what I assume).

Hi everyone,

I think overall that sounds pretty solid with you, especially with the existing land and equity you are already better positioned than many others. An interim financing, as already described, would really make sense in your situation. This makes you flexible and you don’t have to rely on expensive special repayments.

Regarding the construction costs: If you really want to end up with 140 sqm including a double garage, 450k will be tight, depending on how high-quality you plan. Outdoor facilities, incidental construction costs, etc. must not be underestimated. It would be good to plan a clear buffer right from the start.

If you are planning with a general contractor or prefab house provider, you might be able to better limit the costs, but then look closely at what is really included in the scope of services. A few extras easily get added during the customization.

Best regards
Chris

Outdoor areas by the landscape gardener with drip edge, driveway, paths, a bit of lawn, terrace, simple fence. Depending on the region 50 to 80k. If special requests like stepped garden, built-up raised beds, natural stone, etc., gladly also six figures. Just for a nice fence, with glass elements, etc., you can spend 20, 30,000. And the interior can also quickly cost 50,000.