Realization/Assessment of Construction Financing

Hello everyone,

we have also started our project "Häusle" but are still considering how much the whole thing is allowed to cost.
We already have a building plot and are currently paying it off (with a remaining debt of about €110,000).
The property has a size of about 770m² and a standard land value of €185/m².
That would then correspond to a value of €142,450, right?
Does the difference between value and remaining debt count as equity?
The property is already developed.

About our situation:
Wife (30, civil servant): about €2,900
Me (31, IT specialist): about €3,000 including company car

Fixed expenses:
- €1,000 - loan for the property
- €250 - private health insurance (wife)
- €220 - leasing 2nd car
- €250 - additional costs in the parents-in-law’s apartment
- about €700 other fixed expenses (internet, other insurances, private pension etc.)

So we have a total net income of about €5,900 - fixed expenses of about €2,420 = remaining net €3,480

Unfortunately, except for the property (if that somehow counts as equity) and about €15,000, we have no further equity,
because we financed the property and I have also paid back my BAföG.

We are still relatively early in our planning but roughly calculate about €400,000 extra for the house including ancillary construction costs.
We would like to build with a basement and since we have a slight slope on our property, the earthworks will probably be somewhat higher.
That would give us a total loan of about €500,000.

In the next few years we would also like to have children. We would have to somehow plan for that because then one salary (probably my wife’s) will be temporarily reduced or absent.
But there is the possibility to reduce the repayment rate a bit for two/three years, right?

How do you assess our building project from your experience? We were thinking of an initial repayment rate of about €1,600. Sensible?

Many, many thanks already for your tips and assessments!

Does the difference between value and remaining debt count as equity?

Yes

We were thinking of an initial repayment rate of about €1,600. Sensible?

With a €1,600 rate, between €450,000 and €500,000 are sensibly financeable (at 4% annuity). This means that your house may cost around €350,000 plus additional construction costs, so about €400,000 as you estimated. However, with a hillside location and the corresponding earthworks + basement, it won't be a large villa Otherwise feasible. Pay attention to a possible repayment adjustment in the loan, so you can react flexibly.

Hello, I find the existing financing difficult. Can it be redeemed, is it variable? If not, you are pretty much tied to the current bank because hardly any bank goes into subordination in the land register. If you find a bank that does it, the conditions will probably become unattractive.

Thanks already for your answers!

Yes, we are still not quite sure about the basement, but everything else probably doesn’t make much sense?
We also don’t want to completely “bury” ourselves. It slopes up from the street for us and the “basement” would then be level with the street and underground at the back. Then we could possibly make our terrace/garden at the back towards the forest fairly level. That’s the first thought.

Yes, the existing financing can be paid off. This was only fixed for the first four years and has been variable since the end of last year.