Savings beginner with questions about the plausibility of the "rough" plan

Saruss gets straight to the point

And don't just think about PI. For me, a conceivable scenario (far-fetched): in 10 or 15 years we are fed up with Germany and want to emigrate. Then we sell and a nice start-up capital remains. With the financier without equity, it certainly looks quite different.

Regards, Steffen

And don't just think about PI. For me, a conceivable scenario (far-fetched): in 10 or 15 years we get tired of Germany and want to emigrate. Then we sell and some nice starting capital remains. With the financier without equity, it certainly looks quite different.

If the calculation is correct, then the person with little equity investment has even paid off the house further at the same age (e.g. at the age of 50). So that is actually not an argument, just like the argument illness. The equity savers only remain flexible for longer.

If the calculation is correct, then the person with little equity invested at the same age (e.g. at the age of 50) has even paid off the house further. So this is actually not an argument, just as little as the argument of illness. The equity savers just remain flexible for longer.

You are looking at a "wrong" aspect in this regard. Without equity, there are many years when the situation is such that there are still debts left after selling, so you absolutely have debt. From a certain amount of equity, this is no longer the case. What would be important now is the point in time from which it balances out. Apart from that, building becomes more expensive if you save longer, but also due to stricter regulations; that means you also increase the values, and do not simply get the same house for more money, but a better one.

Construction prices are not rising only because there are suddenly different regulations. Our Kfw70 house (contract signed in 2012) is still cheaper compared to current standard houses, but not necessarily worse.

We also had the typical about 20% equity. Due to delays in construction, it was probably even over 25% in the end. I also wouldn’t have wanted to build without equity.
Still, I can understand the point of the calculation.

The effect of the calculation by is even amplified if children are on the way. Then you might have to move, need money again for moving and furniture because the old ones no longer fit, the rent increases, and so on. All of this would then continuously delay building the house.

Construction prices are not rising just because there are suddenly different regulations. Our KFW70 house (contract signed in 2012) is still cheaper compared to current standard houses, but not necessarily worse.

If you can save 20%-25% equity in 3-4 years, you are right. But if you save that quickly (even though you rent), according to Vanben’s calculations, it is worth saving. With such a saving rate, the interest rate drops very strongly over the period due to a better loan-to-value ratio. As written, your argument is "pro-equity." It is more about when you have to save for equity longer or are financially weaker. And then part of the increase also comes from regulations; with little money, you are more likely to build according to the energy saving ordinance and not an especially expensive KfW house.

We also had the typical approx. 20% equity. Due to delays in construction, it was probably even over 25% in the end. I also would not have wanted to build without equity. Nevertheless, I can understand the point of the calculation.

Of course. But take a look at all the results of the calculation. With the assumptions Vanben makes, it is definitely monetarily worthwhile to have some equity. So we actually all agree on that. The only question is from which percentage amount of total costs it no longer pays to save further. And at this point the calculations are of course shaky, because the results are numerically unstable, i.e., small changes in assumptions alter the monetarily most effective equity ratio, so the optimal ratio is highly individual and can only be reliably determined with a functioning crystal ball (future development!). Important and still not considered at all are the non-monetary aspects, which still do not appear in the calculations. And it makes no sense to keep referring back to the calculation.

The effect of the calculation by is even stronger when children are on the way. Then one may have to move, need money again for moving and furniture because the old ones no longer fit, rent increases, etc. All this would push the house construction further and further back.

That is quite speculation. If you needed that much more money with children, you would also need the same money if you had built. If you have already built without equity and have to cover a high monthly rate, that can possibly become critical. At least in "my world," the stork does not surprisingly bring children, especially when planning to build a house; they come very planned (in our desired year and month...). If children came unplanned, it would be even worse if you already have a house—does the planning (room program, etc.) even fit then? Can you still afford the loan and costs?

Yes, personally I am in favor of equity. But I don’t have to have 50% for that. My wife is personally shaped and actually hates loans (parents’ bankruptcy due to transferred factories after the reunification). And I will also make three XXX marks on the calendar when the loan is hopefully paid off in no more than 15 years. Nevertheless, we have a loan on our back.

I think the historically stated 20-25% equity was not so bad, even though it comes from a different interest rate level. From an economic point of view, however, I agree with that it makes no sense to save up that much at the current interest rate level, since not only house prices but also land prices are rising. I am not talking about 110% financing. Those who can live with being not only in debt but theoretically over-indebted for 3-5 years can gladly do so. There are plenty of others who take out consumer loans for TVs/phones/vacations etc., which in my opinion is much worse. I want neither.

In my post, I was not talking about the costs of raising children, but purely about the costs for an additional move to a bigger apartment. For the “equity-savers and homebuilders in their mid-30s,” child-related topics before building a house become more likely with increasing age than for the “under-30 immediate homebuilders.” With child(ren), the affordable 2-room apartment may no longer be sufficient, so an extra move simply becomes necessary. This initially reduces the equity again, and saving next to rent becomes even more difficult.