Single-family house with LABO and land from the municipality for €444k

Hi everyone!

A quick intro about us: He (33 years old, €2500 net), She (38 years old, €800 net) and the two girls (4 years and 2 years) current rent including utilities €800.

After we now received the approval from the municipality for a plot of land in a new development area, we would like to build a little house.

The 593 sqm plot costs only €150k including additional costs!
We have now planned a solid house with a local construction company, the entire cost is €260k. (DIY labor hours for flooring and painting, no basement, living area 118 sqm)
We have planned €30k for the house connections and some outdoor landscaping. (I know, landscaping is expensive, but everything will be done by ourselves.)

Our financing looks as follows:

€148k Interest reduction program
2.05% interest, 2.53% repayment, €565 monthly rate (full repayment in 30 years)

€50k government building loan
0.5% interest, 1% repayment, €62 monthly rate (15 years)

€165k Savings bank
1.67% interest, 3% repayment, €640 monthly rate (15 years)

€67k equity
€14k DIY work
€15k buffer (not included in the financing, securities and various contracts that would only be canceled with loss in case of emergency)

Now I have a question about my remaining debt after 15 years...
That would be €80,400 from the savings bank and €37,800 from the LABO, so €118,200.

On the one hand, I wanted to start contributing to my old Riester pension from before 2007 again. (Thanks again to the "persuaders" here in the forum)
After 15 years that would be €35k without interest, so that leaves €83,200 to secure!
Would you recommend a home savings contract or prefer follow-up financing?

My wife thinks (we are both very frugal) that we could arrange most of it through special repayments because she will soon earn more again. Monthly we "only" pay €1270 for the loans... I am rather skeptical about that.

Thanks in advance!
Marvin

Would you advise me to get a building savings contract or rather go for follow-up financing?

I wouldn't secure anything further with an outstanding debt of €83,000.
Example for follow-up financing:
2% interest, 10% initial repayment would result in a monthly rate of €830 and you would be finished in about 9 years
4% interest, 10% initial repayment would result in a monthly rate of €968 and you would be finished in about 8.5 years

You see, even with doubled interest rates, your monthly burden doesn't explode.

Ok, that reassures me a bit, thank you!

I have a off-topic question. I am currently saving €70 and 2x €30 on "fondsgebundenen Rentenversicherungen" for myself and my children. Should I continue funding them, suspend them, or have them paid out? Theoretically, that would also be €1560 per year that could be put into special repayment.

Doesn't your backside freeze at a monthly income of €3300 and a loan of €365k?

The €1270 would be nearly €1700 monthly for housing including additional costs without you being able to build reserves or save for a special repayment.

The amount is certainly not insignificant.

I also don't believe that much will be left for special repayments at the end of the year. You are already factoring that into this "that will gradually be done by EL itself." Or where does the money for materials and gardening tools come from? So I wouldn't include it in the calculations. Have you calculated the incidental construction costs?

Of course I have a lot of thoughts about it... Something can always go wrong! But if it really should fail after a few years, I am pretty sure that we would come out of it without a loss. The neighboring plots were sold on the open market for €330k-€400k, so as long as the real estate bubble doesn’t burst that badly, it definitely sounds like a good investment!

Most of the incidental costs are already included, the only things still to be added are the house connections, excavation removal, insurance, construction electricity, and exterior facilities. For that we have now planned €30k.