Proper construction financing repayment and equity?

Dear forum,

I am currently working on a construction financing and between repayment and equity the question arises for me: is financing even realistic???

Following situation:
A nice mid-terrace house is currently being built, which I definitely cannot deny interest in. Completion is scheduled for September 2010. This mid-terrace house may cost around 350,000 euros. Including incidental costs (notary etc.) a total price of about 367,000 euros arises, minus equity we have a financing requirement of 317,000 euros.
I think I will be able to manage the double burden until completion (rent 1000 euros + construction period interest) without tapping into the last reserves.

If I now calculate aggressively (1% repayment etc.) I come to a monthly rate of 1,300 euros plus incidental costs, which I estimate at about 200 euros (KFW 55) - in total 1,500 euros. The funding measures are also taken into account here.
My net income is about 2,700 euros without major liabilities from car financing or the like.
My wife will be financed by parental allowance throughout the coming year - approx. 400 euros and thereafter about 600 euros per month. After two to three years (parental leave) back to full-time earner at 60%. Next year we will have two children (three and zero years).

Now many questions arise for me:
Is the rate with 1% repayment calculated too low, measured against the total financing effort?
I have seen a calculation according to which the nice little house cost me almost 650,000 euros at the end of the financing - all because of the interest. Is that normal?
Is this project too big?
Are the incidental costs realistically estimated?
Have I forgotten any position in my calculation? According to my calculation I thus come about 500 euros higher than for rent. For that, I no longer have to save for the home :)

Your feedback is very welcome in this case!

Of course, I am happy to answer any questions or provide further information.

Regards!

Hmm, I don’t know which funding options you could use on your end, but with that amount, 1200€ over (30 years ???) seems a bit low to me; I would rather calculate with 1500€.

Usually, if everything goes well, you pay on average double the amount over the loan term, meaning you will end up paying about 600,000€. If you want to pay less, you have to increase the repayment.

200€ additional costs are probably way too little for a KF55 house!
How many m² and people are we talking about?
I assume 125 m² and 4 people.
- Electricity approx. 70€/month
- Water approx. 60€/month
- Heating approx. 40-80€/month depending on what you want to use for heating and if solar is added, etc.
- Street cleaning and waste disposal approx. 20€/month
- Building insurance approx. 25€/month
- Property transfer tax no idea

Furthermore, you will have costs for GEZ/Cable TV/DSL and additional renovation costs over the years, and I’m sure I forgot to mention some things.

edit: e.g. chimney sweep and heating maintenance also cost about 300€ annually.

So honestly, your income is quite okay for building a house, but as a sole earner with such a large loan, I’d personally be a bit scared! But you can have a bank run the numbers for you to see if they consider you liquid, but I’d say with 2700€ - approx. 1500€ loan - 350€ ongoing monthly house costs - possibly a car loan, there’s not really much left over!