Not paying off the house - dumb or sensible?

Hello,

in Münster, as in many places, house prices are relatively high and especially steadily rising. My wife and I (2 children) are now faced with the question: Either buy a home that we can definitely pay off by retirement or one that meets our wishes but cannot be paid off by retirement with the current installment plan. I actually find the latter quite reasonable, for the following reasons:

[*]The price situation in Münster is at least stable, if not even steadily increasing. That means selling the house is quite likely possible under good conditions. Then only the interest would be lost, but possibly there would be a gain through appreciation.
[*]The property even has the potential to sell part of it in the future in case of financial shortage or to build another house on it yourself and rent or sell it.
[*]Our parents have houses that are also largely paid off; so we may eventually inherit to pay off the remaining debt. Conversely: If one planned without any remaining debt and the inheritance actually came, one would have a lot of money but not the house one always wanted.
[*]In the remaining debt calculation, if we consider that we will increase the installment in the future through salary increases and extra work (the installment is just about right for the current parental leave; with the following 150% work from both of us, it would already be manageable, and if we both eventually work 100% again, we could pay a significantly higher rate or make special repayments.
[*]In old age, one could also rent out part of the house and thus continue to service the installment.
[*]Ultimately, it was always part of the plan for us to possibly sell a house once the children are out of the house – that would be before retirement anyway and then with a remaining debt.

I would just be worried that one might regret at some point, when one has paid off a house at 60 and suddenly has money left over and then also inherits, that one has not lived their life in a bigger house or at least with a bigger garden.

Stupid/naive, understandable? Gaps in reasoning? Looking forward to feedback.

My opinion, buy a house that you can afford now. No one knows what the future holds. Even the two inherited houses can quickly vanish in the event of needing care. Do you then have a bank that will give you a loan you do not plan to repay?

Calculating with something that might come in the future would be too risky for me. A matter of attitude. I am focused on security. Then you can sleep better.

one that meets our wishes but cannot be paid off with today’s installment planning until retirement.

Then explain that to the bank first. "Yes, we have two houses in the background, but they belong to our parents. When they are no longer around, we will sell them and then you will get the money."
A more expensive house usually also has a more expensive installment. Is it even certain that you will get the corresponding loan volume? You can’t really extend much because you’re already always taking out loans for 20/25 years anyway.

The price situation in Münster is at least stable, if not even steadily increasing. That means selling the house is pretty much possible under good conditions. The only loss would be the interest, but there might be a gain through appreciation.

If the crystal ball is that good then go ahead. Who knows what it will look like in 20 years.

Our parents have houses that are largely paid off; so we might eventually inherit in order to pay off the outstanding debt. On the other hand: if you plan without any remaining debt and the inheritance actually comes, you'd have a lot of money but not the house you always wanted.

And what do your parents say about that? As for me, I certainly won’t restrict myself in old age, and if I feel like living it up again at 60, the house will be sold and the world traveled. But I also have no children. Maybe better that way.

In old age, one could also rent out part of the house and continue to cover the installment with it.

That’s nonsense. Then you have to plan directly with 2 residential units, etc. That costs unnecessary money and shouldn’t be pursued further if everything is tight anyway.

Ultimately, it was always part of our game plan to possibly sell the house when the children are out of the house – that would be anyway before retirement and then anyway with a remaining debt

Again, crystal ball. So in about 20 years. Maybe 25. Such an idea is not bad in itself, but it shouldn’t be factored into the financing.

One factors into the remaining debt calculation that we will cover the installment in the future through salary increases and overtime (the installment is just barely suitable for the current parental leave, with the upcoming 150% work from both of us it would already be manageable, if we both go back to 100% at some point, we could pay a significantly higher installment and/or make special repayments

I think if you tell that to the bank they won’t give an okay. Too much in the future. What counts is usually the present.

I am just worried that one might regret at some point if one has paid off a house at 60 and suddenly has money left over and then also inherits, that one has not lived life in a bigger house or especially with a bigger garden.

Most people are happy if at 60 they only live in a 140 sqm house and not 200+.

I understood it such that you have a plot in sight but are on parental leave. I would try to buy the plot now and wait out the parental leave. Then start building the house. You can take a little risk. After all, you have a certain asset at hand, but the current situation isn’t fitting and I doubt, as mentioned above, that the bank will give you the go-ahead.

I find point 2 cute. I buy a house with a large plot of land that I can't afford, and then I also want to build - with what money? Never mind, I'm more of a security type anyway. I will also inherit something if it "goes well." If it doesn't go so well, the house price will eat up the nursing home. And possibly even more.

My opinion: Live in the now as much as you can afford. The house must be affordable, but not paid off by retirement. In old age, you can also easily exchange the property (which was perfect with children and a large garden) for a small rental apartment (and spend the money saved from paying off the mortgage freely) or also exchange it for a small apartment (significantly lower additional costs than the house). Your house will then be "old" and will slowly need comprehensive renovation.

P.S. The majority of Germans do not have debt-free property in old age.