Please give your opinion on buying the house

Hello everyone,

for some time now, if not years, I have been repeatedly dealing with the topic of buying a house. Currently, my wife (38 years / €1,200 net) and I (39 years / €3,000 net) live in a condominium purchased in 2001. The apartment was a new build at the time (purchase price in DM 320,000) and currently there are still liabilities of €70,000 on it. The ongoing costs for the apartment amount to approx. €800 per month. Unfortunately, there is no equity for a house purchase (money is available but should serve as a general reserve).

I am now considering what financing options would be possible for a house. Another question would be what to do with the condominium (rent it out / sell it now).

The goal with the house purchase would be to have the place paid off in 25 years, i.e. by age 65.

Over the weekend, acquaintances who are currently also buying a house visited and plan the following: buy and finance a house now. Financing would also last until the main earner is 60. That would be in 20 years. However, the financing would be structured to have a residual debt of €xx,-- after 20 years in order to keep the payments lower. After the financing term of 20 years ends, the plan is to sell the house again, pay off the remaining debt, and then move into a smaller property (rental apartment or small condominium). Somehow I don’t find this idea so bad, but it also seems to me to be associated with greater risks and unknowns.

Thanks for your information.

Regards

You then have to repay the outstanding debt with the sale of the house and pay for a new property, otherwise you will have a new financing again that you actually wanted to be done with. That can work, but it doesn't have to.

You don't write whether you have children or want any, if you don't have and don't want any, a smaller house is probably enough and then I don't really see the advantage of a condominium in old age.

I would try to get rid of the etw. Building a house makes 0 sense before that has happened.

Over the weekend, acquaintances who are currently also buying a house visited and are planning the following:
Buy and finance a house now. Financing also until the main earner is 60 years old. That would be in 20 years.
However, to keep the installments lower, the financing would be planned based on a residual debt of €xx,-- after 20 years. After the 20-year financing period expires, the plan is to sell the house again, repay the outstanding residual debt, and then move into a smaller property (rental apartment or small condominium).
Somehow, I don't think this idea is so bad, but it also seems to me to come with greater risks and unknowns...

Regards

A colleague of mine had a similar thought.
However, he added the following: If one plans to continue living in the house, the loan would need to be reduced to an amount that could be sustainably borne by the pension (e.g., if financed with €400,000, €50,000 would remain). In contrast to rent that would then have to be paid, this installment burden would be easily manageable.
The whole consideration (selling and moving into a new, smaller property) may, however, have to be viewed differently depending on the region. For example, the sale in regions with weak structures (e.g., Mecklenburg-Western Pomerania) might bring in less than the smaller new build costs. Conversely, I can imagine that, for example, in the Stuttgart area (based on the current situation), one might even come away with a decent nest egg for old age after the sale.

Currently, my wife (38 years / €1,200 net) and I (39 years / €3,000 net) live in a condominium purchased in 2001. The apartment was a new build at the time (purchase price 320,000 DM) and currently there are still liabilities of €70,000 on it.
The ongoing costs for the apartment are approximately €800 per month.
Unfortunately, there is no equity available for a house purchase (the money is there but should serve as a general reserve).

From my point of view, there are two options:
You want to sell the apartment. Then you should proceed with the sale and repay the remaining loan. You may have to rent an apartment for a few months or come to an agreement with the new owner. Advantage: You would have a lot of equity available. Disadvantage - see rent.
You want to keep the apartment and possibly rent it out. Then you should try to have your financing bank (for the house construction) pay off the remaining loan. But note that the apartment must be rented out by you and you must also pay tax on the rental income – i.e., gross is not the same as net. Advantage: The financing bank can place a mortgage on the apartment, which means you can offer security equal to the entire value of the apartment = presumably better terms. Additional advantage: The terms for the €70,000 are probably better after the interest rate drop of the last few months. Disadvantage: You have a higher loan volume that must be financed. Also, you have to take care of the rental and its risks.
It’s a complicated story – hard to say what’s better.
Friends of ours went the first way (with a house). But they also got more from the sale than they put in.

Hello everyone,

thank you already for your answers.
Regarding children: We don’t have any and (unfortunately) it will stay that way...
So we don’t need a house with 150 or 160 sqm, but it should be bigger than our current apartment.
It has about 100 sqm on 2 floors and somehow we always don’t have enough space...

What do you generally think about the approach of our acquaintances.
As mentioned, I like this proposal, but isn’t it somewhat risky/maybe also naive??