Semi-detached house (130 sqm) in South Bavaria financing

Hello dear house-building forum members,

we are about to sign a purchase contract for land and house, and I am worried that we might be financially overextending ourselves. Therefore, I would like to ask for your opinion on this topic.

We have been looking for some time (like many others), and the market in our desired location (south of Munich) is practically cleared out. Since our eldest daughter is supposed to start school next year in the desired location, we are under some time pressure. We currently live in Munich but want to move away from there. We don’t necessarily have to buy; renting would also be okay, but there is a risk that we won’t get a rental contract in the desired location by September 2022 (we both recently started working there, market is empty, and for the few rental offers for houses/garden apartments there is strong competition). Therefore, we believe this might potentially be our best chance to move there by September 2022.

About us:

- We are both 38, I am permanently employed (40h), she is a civil servant teacher working part-time (60%).
- 2 children (3 and 5 years old), family planning is complete

Monthly income:
4,800 euros net (me)
2,150 euros net (her, after private health insurance)
440 euros child benefit
---------
7,390 euros net monthly

Additionally annually:
4,800 euros net Christmas bonus (me)
1,550 euros net Christmas bonus (her)
5,000 to 8,000 euros net bonus
-----------
approx. 11,000-14,000 euros annually (e.g. for extra repayment)


Costs for the house:
570,000 euros plot 560sqm
640,000 euros house (130sqm + basement, KfW55) including earthworks and outdoor facilities
50,000 euros incidental costs
--------------
1,260,000 euros to finance

Loan/equity:
1,060,000 euros loan (20 years fixed interest, 1.21% effective annual interest)
200,000 euros equity

That leaves us with 100,000 euros as a buffer for possible additional costs (and if not needed for extra repayment)

Future monthly living expenses:
3,900 euros repayment (approx. 3.7% repayment rate) (current rent: 1,300 euros warm in non-desired location)
500 euros operating costs
300 euros reserves for the house
700 euros food/hygiene/household
100 euros clothing
100 euros TV license/internet/mobile phone
400 euros car incl. fuel and insurance (1 relatively new car)
20 euros liability insurance
250 euros childcare
300 euros vacation (not mandatory)
200 euros small outings/eating out
50 euros children’s courses/entrances
------
6,820 euros living expenses
7,390 euros - 6,820 euros = 570 euros buffer for ETFs or extra repayment

Without extra repayment, we would need 26 years to pay off the loan. KfW55 subsidy (461) has not yet been calculated.

What do you think? Still justifiable or too much of a gamble and better to speculate on a cheaper house/rental offer with the risk of having to enroll in school in Munich?

Many thanks in advance for your opinion!

Phew, that's intense! So personally, I would see the pain threshold for you at a 750k loan. The problem is the "large" property, but unfortunately, that can't be changed. Probably there are more people who currently finance something like that, and in case of emergency, maybe "only" the incidental costs are lost. I wouldn't be able to sleep peacefully anymore with that loan amount.

prefer to speculate on a cheaper house/rental offer,

That’s possible, but realistically it’s rather unlikely. ;)

Those are already high amounts, but it would fit, although probably just barely. You need to know if you can live properly with the rest. Is the 300 K equity saved up by yourselves?

Are the 300 K equity saved up by yourself?

Thank you very much for your assessment! 240,000 euros of which saved by myself, 60,000 euros of which from parents/grandparents.

That would be too tight for me. Your entire salary will go towards the house. The special payments are more likely to be used for repairs, computers, mobile phones, sports equipment, ski courses, etc. I know the region well, and not only the houses are more expensive there. Everything has the Starnberg surcharge. We are even moving away before the start of school to avoid exposing our child to the pressure from the wealthy elite. We simply can't keep up with that.

I wouldn't be able to sleep a single night peacefully with that loan amount.

Thank you for your assessment!

That's how it currently is.. but I could live even less with having to enroll the children here.

The alternative would be to speculate on being accepted for one of the few rental offers.