Realistic house construction project

Hello everyone,

I wanted to get some advice from you experienced forum users about whether my building plan makes sense.

Briefly about the data.

Me 33, my wife 33, a daughter 3, we would like to build a bungalow with about 150m2. I have a plot of land with 649m2 area. We would also like to have about 100m2 garden at the house.

Income. Me: 3,000 € She: 1,900 € Equity: 45,000€ Reserves 20,000 €

We have an offer for a prefabricated house of 310,000€ as we want it. Including all costs (land/notary/gardener/foundation/house etc.) we have planned a budget of 485,000€. We want to repay this with about 1,400€ monthly.

1st question: Is the plot sufficient for our needs? 2nd question: is our budget planning sensible and realistic?

The man from the prefab house company said it is quite possible. BUT I would very much like a "neutral" expert opinion on it as well.

Many, many thanks in advance for your feedback.

Best regards Andreas

Do you dare to take on a €2000 installment? (I would trust you to do it - but I don't know your expense structure) - €1400 would be too little for me. The plot should yield 100 m²... although I also don't know how where what (all of that is missing)

Do you dare to manage a 2000 € installment? (I would trust you to do so - but I don't know your expense structure) - 1400 € would be too little for me.

With 2% repayment, an installment of ~1,500 euros is possible. Start small at first, include 5% special repayment per year, and get through the first 2-3 years. Then things should have calmed down, and there should still be a good amount left for special payments, or you can increase the repayment.

You will have more than one hundred square meters of garden. Except, of course, if you want a huge driveway... Basically, you should take a look at the site plan and mark all objects such as the house, garage, access path, etc.

If I assume 440 T€ with 1400 € per month at a benevolently assumed 2% interest until the end of the term, you are at 38 years - so at your 71st birthday. With 2000 € per month, it would be 23 years - so until you are 56. Of course you will earn more later and make special repayments diligently... but yes, just saying.

A financing plan where you speculate on paying the special repayments every year to be finished somewhat early is not something I would do. In my opinion, it is simply utopian to believe that interest rates will remain that low for the next 20-40 years. I consider that a dangerous ground. It can quickly break your neck if interest rates are back at 7% or higher after 10 years. I also wouldn’t necessarily speculate on earning more in x years with the financing. That may be true, but the ratio to the cost of living is not necessarily much better than it is now.

I also find financing that lasts more than 20 or 25 years not sensible. That’s quite a burden to carry around. Given the salary situation of you both, it should be doable though. But I would also consider what happens if one of your incomes fails for an extended period — can you still afford it then? This applies especially if you are both around 50 years old. At that age, it is difficult to find a job or a well-paid job, and if there is still a huge remaining debt, you might stumble, and that is exactly what should not happen at that age. Personally, I would structure financing for a property so that I’m finished or almost finished paying by the age of 50 at the latest. Otherwise, it would be too risky for me or the value creation wouldn’t be high enough. However, I prefer investing in an apartment because I simply don’t need a house. That’s enough for me, I can pay it very comfortably, and I don’t have to make compromises when it comes to leisure activities, vacations, and other fun things that cost money. In addition, I’m done paying off in well under 20 years. That’s how I prefer life, but everyone has to decide that for themselves.

To answer the questions.

1. question: Is the plot of land sufficient for our needs

On a 650m² plot, you should be able to manage that easily.
250m² house
36m² double garage
36m² driveway
50m² terrace
310m² garden
(Depending on what you are planning)

2. question: Is our budget planning sensible and realistic?

I find the price expensive or is it just me? Do you have a basement included or something special?
To be honest, I’m not really familiar with it, but does a house/bungalow with only one floor cost that much?
What do other offers say?

I think you should carefully consider how you want to do it. If you go by the rule of thumb for rent, which states that rent should not exceed 1/3 of the income, then with you it would be 1633€. For ownership, you can probably pay a bit more because it’s your own property. So maybe 2000€ could be possible, which means paying for 20 years. But only if everything stays as it is.

I have seen two cases in my circle of friends where the monthly rate became an ever-present companion. When vacations have to be cancelled, some hobbies have to be cut back, or the general quality of life takes a hit, it simply isn't a pleasant life anymore.

€: Are the salary details net or gross?
I don’t want to scare anyone or anything like that, you can probably afford it. But you should simply know what you are doing and not rush into anything.