Planned financing land + single-family house 2022/2023 - Are the framework conditions suitable?

Hello everyone!

I, or rather we, come from Central Hesse and currently still live in a 60 sqm apartment rented in our beautiful village of 600 inhabitants. Originally, we had planned to live here until 2024/2025 to save up some equity by then. But as it always happens, things turn out differently than you think. We moved here 3 years ago and feel very comfortable here, have made many friends in the village by now, and definitely want to stay living here. For 2024, it was planned to develop a new residential area with 12 building plots just one street away from us directly by the field, which would have suited us very well. But now everything is going much faster than initially thought, and the building plots have already been developed since June 2021, with planned completion of the development by the end of 2021, and the planned sale of the plots in Q1/Q2 2022.

We actually managed to have our absolute dream plot reserved non-bindingly, and since then, of course, thoughts have been running wild – anyone who has ever been infected with the building fever will know what I mean:

Edge of the field location, last house in the small new street at the cul-de-sac, 795 sqm plot, developed price 100 € / sqm plus extra costs. Now, I have been reading up a bit here the last few days and am wondering whether our "rough planning" is possible in this form.

Personal data:

[*
She: 27 years old, completed master’s degree in 2021, full-time job 39h/week starting August 2021 (preparatory position for civil servant in the higher service – public relations area), initially fixed term for 2 years, further employment according to the job interview "very likely," starting net salary about €2000 plus 13th salary, Christmas bonus & vacation pay
[*]I: 30 years old, completed master's degree in 2017, full-time job 40h/week since December 2017 (Project Management, permanent), currently net approx. €2500 (annual increase without promotion about 8%). From February 2022 already confirmed promotion to Senior Project Manager, net salary then approx. €3000. From 2023, proposed by my supervisor (and unofficially already confirmed if nothing else comes up) team lead Project Management, net salary then approx. €4000.
[*]Currently (still) unmarried, wedding planned presumably 2023/2024.
[*]Currently (still) no children, wish for children exists, but we agree that the house should be built first and then some time should pass -> planned around 2026 (if one can speak of "planning" here)
[*]Total household net income in 2023 thus approx. €5000, rising trend.



Financial situation:



[*]Current equity approx. €10,000. This is the part that worries me a bit, even though you often read that the equity ratio is no longer that important if the household net income fits.
[LIST]
[*]Reason for the low equity ratio: Took out a student loan for the bachelor’s degree (KFW, approx. €45,000) plus Bafög (approx. €10,000). Both loans are – also thanks to my mother’s support – as well as my previous savings, already fully repaid or settled, so not much is left right now. We currently save about €750 per month, sometimes more, sometimes less (planned to save more monthly with her new job starting August). It is important to me to be able to enter such a major project debt-free.


[*]Household budget is maintained, current average joint monthly expenses (excluding cold rent) are about €2,800, which is rather generously calculated and includes everything like groceries, two car leasing contracts, fuel, insurances, pet food, telephone contracts, Netflix, etc.

Depending on the constellation and conditions, my mother would also be willing to be entered as a guarantor in a possible loan contract. My grandfather passed away in 2018 and we inherited his house, which we sold in 2019 for approx. €250,000, of which a fairly large part (approx. 60%) is still left. She would also certainly be willing to contribute some more money toward the house construction (or the land purchase), although she has already helped me a lot with repaying my student loan and I would rather not "ask" for more.

Planned is an approx. 160 sqm solid house with double garage/carport (decision solid house <-> prefabricated house not yet 100% made), depending on the best case without major further changes that would increase the price additionally, hopefully with a basement or at least partial basement (would probably have to depend on the price in the end; the basement is "dispensable"), in the direction of Viebrockhaus Maxime 600/700 for example – incl. KFW55 and KFW grants. By our early 60s, we both would like to be "debt-free," so repayment might well take about 27-30 years.

I hope this is enough information for a "rough assessment" on your part. We would like to buy the plot – if it comes so far and the municipality contacts us – in 2022 and then start building the house in 2023. Realistic? Or more like cloud 7 daydreaming?

If more information is needed, please let me know. Thanks in advance!

Many greetings from a now "house-building-infected" young Hessian! :)

The bank only calculates with the current income, neither with salary increases nor with inheritance or gifts. All other information suggests that life was not lived purposefully. Bafög and student loan, finished the university of applied sciences degree only at 27, 2x car leasing, spent 100k from the inheritance. Therefore, in my opinion, 2 sizes too big and a few years too early.

The current figures are not suitable for a bank at the moment.
If your girlfriend is also working, it looks better. In the case of civil servant status, banks are somewhat more lenient with fixed-term contracts according to my knowledge.

Your expenses of 2,800 are enormous (excluding rent). What kind of cars are those?

The goal should be to increase equity (= save, accept help from your mother (private loan)), so that you can buy the plot without a bank.
Then, after a few double salaries, go to the bank:
Equity = plot + some cash assets (buffer, kitchen...)
Good prospects and then, already with your promotion in pocket, nothing should stand in the way of the (moderate) house construction.

Thanks to you first of all! A few remarks from me, I don’t want to leave this uncommented :)

the bank only calculates with the current income, neither salary increases nor inheritance or gifts.

That is of course absolutely clear to me, but I wanted to mention it for the sake of completeness.

All other information suggests that life was not lived purposefully.

Honestly, I find that difficult to judge based on my one post here, I think one shouldn’t generalize like that...

Bafög and study loan, finished the university of applied sciences degree only at 27

When I started my bachelor’s degree, we were not exactly “rich” – on the contrary. Therefore, the study loan was at that time the only chance to cover the arising costs (private university, moving, etc.), I see nothing wrong with that. In hindsight, I would do it the same way; bachelor and master have personally brought me a lot. About finishing the university of applied sciences degree only at 27: I was born on July 1st, so at the time I was just barely not enrolled with the 1990 cohort, otherwise I would have finished my Abitur a year earlier. After the Abitur in July, I immediately started my bachelor’s degree and completed it in the standard period of study, then immediately started my master’s degree and also finished it within the standard period – it was therefore not possible for me to be finished before 27. Parallel to that, I also worked as a working student for 2 years and had a side job alongside my studies, so I do not want “life not lived purposefully” to stand like that.

2x car leasing

That can certainly be debated. The fact is that we both depend on a car. I used to share a car with my mother (not possible anymore after moving out accordingly), my partner’s Polo had 200,000 km on the clock and urgently needed to be replaced. That’s why we decided to lease, also aware that the house construction would probably take some time and without the knowledge that we would get a building plot so quickly. In the end, it’s certainly debatable whether a somewhat cheaper car would have done, of course.

100k spent from inheritance

I think here one should differentiate how and what my mother spent the money on. I don’t want to go into detail now because it’s not my money, but I can only say this much: no money was thrown out the window or spent unnecessarily here, on the contrary. A large sum was invested in renovating her apartment (new kitchen, complete bathroom, complete living & dining room), where she has lived for a long time and will continue to live permanently, part was used for my repayments and also a new car had to be bought here (cash purchase, small car, 3 years old, about €15,000). Part (about €30,000) is additionally invested in ETFs and stocks on the stock exchange.

Therefore my opinion 2 sizes too big and a few years too early

Thanks for your assessment! :)

The current figures do not fit for a bank at the moment. If your girlfriend is also working, it looks better. With civil servant status, banks are, to my knowledge, a bit more lenient with fixed-term contracts.

Your expenses of 2,800 are enormous (without rent). What kind of cars are those?

The goal should be to increase the equity (= save, accept help from your mother (private loan)), so that you can buy the plot of land without a bank. Then, after a couple of double salaries, go to the bank: equity = land + some cash reserves (buffer, kitchen...) Good prospects and then, already with your promotion in hand, nothing should stand in the way of (moderate) house construction.

Thank you very much! :)

As I said: My girlfriend will start her job in 2 weeks and according to the municipality, the plot will probably not be offered for purchase before summer 2022. Until then we plan to continue saving a bit. Of course, I know that this currently will not work like that! :)

The cars are a Seat Leon station wagon and a VW Golf. The 2800 euros also include quite a bit of buffer, realistically I think it’s more like 2300-2400 euros. Edit: I recalculated and had actually unintentionally included the current cold rent. So the 2800 turns into about 2200 (+- 100).

I already had the idea of buying the land without a loan as well—let’s see if we can work towards that together!

The total volume will certainly be around +-600k€, which you will then have to finance completely. In my opinion, that is at least one size too big for you. You are looking at about 2500€ per month with credit and additional costs.