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

: but the 3% do not hold true in the long term (hey, and with those sums you can also get more than 1% interest). According to the Federal Statistical Office, from 2000 to 2014 the average for new buildings! is just under 1.5% in total ("old" federal states, the increase in costs is even lower in the new ones!). Besides, you could also compare the different values of the buildings in 2036 (20 years old and worth 350k vs. 10 years old for 470k is a difference in sales value!). But the result only shows what I have been writing all along; but probably not clearly enough (?).

I therefore tried to approach this by comparing certain assumptions as examples. It is of course easy to criticize these assumptions, but then please be specific so that it can be calculated.

No one is criticizing the assumptions. It is the "nature" of an assumption that it is estimated, and no one knows how it will develop further; likewise, they can vary individually. Otherwise, it would be a fact. Therefore, no universally valid "formula" for the best equity ratio, not even just monetarily, can be calculated. One can only estimate with as concrete assumptions as possible for one’s own current situation whether it is better to save or not – and weigh the financial difference against the risks and advantages/disadvantages. We should set up a table with the input of assumptions and the display of differences at the end so that anyone who wants to know can enter their situation.

I think you misunderstand me. When I speak of expenses in this context, I do not mean equity as such, but the costs related to saving it (see above). And you (and every non-millionaire) certainly lack this, and that is what I referred to when I said that among the long list of "safeguards" (you can also call it "essential costs in the future") some things are much more relevant/likely (e.g., purchasing a new car). I have read this once before here in the forum in a different context. You HAVE financed the car, since you still owe the bank money for the house. That is a problem every homeowner struggles with; all money spent during the repayment phase is burdened with interest, and the longer it "sits around," the more expensive it gets.

I think you misunderstand the "big" context here. I have actually not financed the car, but still the house. Ultimately, debts are always debts, of course, but if I finance a car that may be more expensive (interest, especially if I really want to finance 100%) than the house. Otherwise, I could argue that I consume "financed" meals every day because I still owe the bank money for the house. And I also only write on financed paper. And my PC too! (Besides, I have already made the maximum special repayment for the house, so nothing is just sitting around unnecessarily). It is kind of obvious that higher repayment saves compound interest, but that affects equity savers and non-savers alike and then does not fit the topic. When comparing, it should be under the same conditions and the same "procedure" or spending. Otherwise, the costs of saving are not that high, depending on the calculation, and in both cases we are not talking about money one has but (if the house is not sold) about who has fewer or no debts left after 30 years. But you don’t have the money for a car or your children or whatever 20 years earlier either. What is important is the years in between – especially the initial years as I said – if you finance without equity, the first 15 years are definitely harder, riskier because you have no reserve.

The examples should, however, represent a plausible case in their structure, on the basis of which considerations about the "optimal" financing regarding equity can be made. My primary concern was to question the dogma "You need X% equity."

Unfortunately, this "optimal" is very case-dependent. Usually, forum participants answering questions take the information from the questioner into their consideration, so you cannot really speak of a "dogma" here. Otherwise, I think there is agreement in terms of "at least incidental costs" (which can quickly be 40k+ depending on the plot desired) + x%, which is being discussed. I think we should determine the parameters for calculation (i.e., which ones, not how high) and create a table, and then everyone can decide for themselves how much risk they want to bear or when which variant is better for them.

: but the 3% are not correct in the long term (hey, and with those amounts you can also get more than 1% interest). According to the Federal Statistical Office, from 2000 to 2014 the average for new buildings overall is slightly under 1.5% ("old" federal states, in the new ones the increase in costs is even lower!).

You have seen the same statistics as I have.
3% was far below that in the 4-5 years before, so that 1.5% over 14 years fits.
But these are only the pure construction costs.
Unfortunately, I have not found data on the development of average land prices. I suspect that the price increase there is probably higher than 1.5%. In sought-after locations, probably even much higher.

I believe that in sought-after locations, the increase in land prices is higher, while in less sought-after locations it probably stays the same or decreases. Just a normal market after all. The higher construction costs in the last 5 years are, in my opinion, also due to the Energy Saving Ordinance 2009 and KfW funding – on one hand, this raised the minimum costs, on the other hand, with better funding some could afford more. With the 2014 version and the increased funding framework/terms, I can imagine (if they now maintain the interest rate policy) that some can afford a few more euros at the same monthly rates. The interest rate level also plays a role (more credit at the same rate – you can afford more), meaning the standard rises.

On the topic of equity, here is our project:

We took out a loan of 625,000 euros for the house and land, with 25,000 euros equity, so practically none.

Although these numbers may seem alarming at first glance, something like this can work.
The rate is 2300, 15,000 ST p.a. possible, interest on various components averages 1.9%, terms from 10 years to full repayment. Household net income between 7,000 and 8,000, tendency rising.

Why do we have so little equity?
We have only been employed for 5 years, salary was also not that high at the beginning, and we have lived extravagantly so far:

[*]high-quality branded furniture for the apartment

[*]expensive vacations

[*]purchased a nearly new Audi

[*]wedding was not cheap either

In short, we have treated ourselves to many things over the past years and regret nothing. For the house, we also do not want to restrict ourselves greatly, except that we will forgo big vacations. We can comfortably manage the 2300, even though a child is planned in the next few years.

Our house has a gas condensing boiler with solar hot water as heating and does not meet the KFW70 guidelines, but the envelope is built according to the KFW70 standard. If we had waited, the house would not have been feasible under the now stricter guidelines and would certainly have become more expensive.

For us, the question arose whether to move directly into a house or rent again, as we wanted to relocate back to our old home due to a shift in our center of life. We chose the house because we stumbled upon a very nice plot by chance. Even though we are now facing a large mountain of debt, we would do it the same way again instead of saving for another 5-10 years.

Don’t get me wrong, this is not a plea against building with equity, fundamentally I think it is right to bring proper equity into the house project, but this is not always a must for solid financing.

On the topic of equity, here is our project:

We took out a loan of 625,000 euros for the house and land, with 25,000 euros equity, so practically none.

Although these numbers may seem alarming at first glance, something like this can work.
The installment is 2300, 15,000 ST p.A. possible, interest on various components averages 1.9%, terms from 10 years to full repayment. Household net income between 7000 and 8000, tending to rise.

Why do we have so little equity?
We have only been employed for 5 years, salary was not that high at the beginning and we have lived extravagantly so far:

[*]high-quality branded furniture for the apartment

[*]expensive vacations

[*]bought a nearly new Audi

[*]the wedding was not cheap either

In short, we have treated ourselves to many things in recent years and don’t regret a second of it. For the house we also do not want to restrict ourselves much, except that we will forego big vacations. We can easily manage the 2300, even if a child is planned in the next few years.

Our house has a gas condensing boiler with solar hot water as heating and does not meet the KFW70 standards, but the envelope will be built according to KFW70 standards. If we had waited, the house would not have been realizable due to the now stricter standards and certainly would have become more expensive.

For us, the question arose, since we wanted to move anyway due to a shift of our main residence back to our home region, whether to buy a house right away or rent again. We decided on the house because we accidentally got hold of a very nice plot of land. Even though we are now sitting on a high mountain of debt, we would do it again instead of saving for another 5-10 years.

Don’t get me wrong, this is not meant to be a plea against building with equity, fundamentally I think it is right to put decent equity into the house project, but this is not always a must for solid financing.

I, with a 500k loan myself, say this: If your income is really secure, I see no problem with it. If you can "sleep" with it... thumbs up! I don’t see my income as secure due to self-employment... so that would not be for me.

Regards, Steffen

Hi Steffen,

well, what is really certain these days, my wife is a civil servant, that comes pretty close. I have comprehensive disability insurance that protects me in this regard. From today's perspective, I consider my job and thus also the income to be secure, but what the future holds, I don't know, we have to bear the risk...

Regards,

Peter