Realistic construction costs & financing planning?

Hello everyone,

we have the opportunity to build a single-family house in the local new development area and are currently working on listing the individual costs and financing. At the moment, we are troubled by the question of whether our cost estimation is realistic and if we are overextending ourselves with the financing.

General information about us:

[*
How old are you? Both 31
[*]Are children planned? 1-2
[*]What do you do professionally? Employees (both under collective agreement). Wage increases foreseeable in the coming years due to the collective agreement.
[*]How many hours do you work? Both ~38h/week


Income and asset situation:


[*]What income do you have (gross/net)?
[LIST]
[*]Together approx. €7,500 net (50%/50%)


[*]How much equity do you have?


[*]Approx. €140k cash. Additionally €20k in stocks.


[*]How much equity do you want to invest in the house project?


[*]€140k

Income and expense totals:

[*
Total income: approx. €7,500
[*]Total expenses (including €540 cold rent, vacations, leisure, insurance, cars): approx. €2,700
[*]Monthly surplus: approx. €4,700


General information about the construction project:


[*]How large is the plot? 600 sqm
[*]What is the standard land value? €250/sqm -
[*]New build (solid construction)
[*]General contractor
[*]Turnkey (ready to move in)
[*]Garages? Double garage
[*]How large is the house? (living area / usable area) 140 sqm living area, 20 sqm usable area (technology + basement replacement room)
[*]What is the market value of the plot and house after completion? > €800k


Construction or purchase costs:


[*]Plot including incidental costs: €161k
[*]Construction or purchase costs including double garage: €570k (fixed price)
[LIST]
[*]Of which €18k for photovoltaic system without battery
[*]Prefabricated garage (2 cars): €26k


[*]Additional construction costs: €23k


[*]Of which current costs for house connections (water/electricity/broadband) only lump sum known: €9,500 (approx. 20m from plot boundary)


[*]Kitchen: €25k
[*]Outdoor facilities: €25k
[*]Construction supervising expert: €3k
[*]Total costs: €807k

Financing:

[*]Less equity leaves €667k to be financed
[*]Current plan: combination of private loan, employer loan and interest-only loan in combination with home savings contract. Monthly rate: €3,200
[*]With this model, we have no residual debt at interest rate risk; the interest-only loan will be converted after 10 years into the home savings contract ready for allocation, fully paid off after 23 years without special repayments.

Have we overlooked or underestimated important points in the cost breakdown (e.g. house connections)? We would appreciate your assessment of the construction costs as well as the monthly financial burden.

Best regards
Thomas

Looks fundamentally reasonable. The problem with the high rate can definitely become the time with children. €3200 is already a huge amount, even if you have a pretty high income. Then there will probably be about €400 additional costs on top, so you will have half of the income gone if both work full-time. If someone later only wants to work part-time, it could really become tight.

Looks like an (for current conditions) attractive interest rate.

The payment would be clearly too high for me for 140sqm with that income. 140sqm houses are available here for less than half (BW) rent.

Thank you for your quick responses. In our area in BW, the rental prices for comparable houses are rather >2,000€ cold/month. With an alternative financing option, we could reduce the monthly burden from 3,200€ to 2,940€ and would pay it off a few years longer. That would probably be the safer option...

Being debt-free within 23 years is quite quick, I would approach that a bit more relaxed, especially if the installment worries you. I see no problem financing over 30 years, by then you will be 61, so still all within limits. The installment should be lowered a bit.

Turnkey (move-in ready)

Sure? What about the floor coverings?

And what about the regular additional costs? Simplest example: electrical installation!

Incidental construction costs: 23K€

[*]Of which currently only a flat rate is known for house connections (water/electricity/broadband): 9,500€ (approx. 20m from property boundary)

Far too little… I would add another 10,000€ for the earthworks. If questions arise, inform yourself first (e.g. here in the forum) before the same topic is constantly rehashed.

Outdoor facilities: 25K€

Also too little. Just covers the garden and landscaping concrete costs.

... I would plan a planning buffer of about 5% and a time war buffer of 10%.