Small techniques of inheritance into the amount of financing?

Hello everyone,

I am relatively new here but have been reading along for some time. I think it’s great how individual topics are addressed here.
We ourselves have had a child for a few weeks now and our apartment will soon be too small.
Therefore, we are looking for a house. In the current situation, it is difficult and especially expensive to find something (> 140sqm, 5 rooms with basement and garden) where you can move in directly without renovations.

About us:
M, 33 and F, 35. My wife is on parental leave until at least the end of 2022 with a fairly high parental allowance. After that, she will work part-time and earn a net of €1,100 (already including a very good company pension scheme and company car).
I currently earn €4,500, which will increase by 2% every year. There is also already a high company pension included, also on tax class 4/4, so that quite a bit will be refunded in taxes.
We have one child.

Due to our expenses, we wonder what purchase price for a house would be possible, since the above mentioned here starts only from about €550/600k (in fact often even more expensive).

In addition to the warm rent of €1,300 and an investment rate of €750, we have a savings rate of €750. Currently, there are still significant living costs of almost €2,000 (insurance and a lot of very good food, currently still €300 for a car, which will no longer apply after parental leave because of the company car).

Equity would be around €80k available (we have just over €100k in stocks, but those will not be touched. However, I would be willing to reduce the investment rate a bit for a loan).

However, the following point comes into play:
Do you think it is possible to factor in inheritances? That means that my wife will quite certainly inherit, and I am 100% sure about at least €600k within a maximum of 20 years. I am sure because both parents are unfortunately care cases, but through private long-term care insurance including subsidies, they still save well every month even though they are both in a nursing home. The special thing is that the state is obligated to provide financial assistance. Therefore, I expect this inheritance sooner or (hopefully) later.

With that, I would currently rather go for a somewhat upscale property with a 1% repayment, after which I would simply pay off the rest with the inheritance after 20 years of fixed interest.

What do you think about this overall?

To make it 100% certain, a gift could be given now instead of waiting for the inheritance. That would be 100% certain, everything else always has an uncertain element. Then everyone has to weigh that up for themselves.

To make it 100% certain, instead of waiting for the inheritance, a gift could simply be made now. That would be 100% certain; everything else always carries a certain degree of uncertainty. Each person must weigh that for themselves.

Thank you, unfortunately that is not an option for my parents. However, there is a Berliner Testament. Sorry for the title! It should of course have said: "Calculate" instead of "Small Techniques".

First of all: inheritance is always uncertain and therefore not interesting for the bank and remains unconsidered in the financing calculation. It has also been rumored or said here for years that 1% repayments are rarely if ever offered anymore, at least since the low interest rate phase.

Therefore, we are looking for a house. In the current situation, finding something (> 140sqm, 5 rooms with a basement and garden) that you can move into directly without any renovations is difficult and above all expensive.

What exactly are you looking for? A new build or a used property? The idea that you don’t have to do anything anymore is probably not found in either option: in a new build, you need to install a kitchen, possibly paintwork and flooring... in the used sector, I would generally replace quite a bit, even if it’s just toilet seats or other worn things. Why are you limiting yourselves with your wish list? There are craftsmen! ... I think it’s already difficult enough to find something suitable in terms of location. I would keep all options open.

offered at about 550/600k (or even partly more expensive).

Even more expensive, okay....! If your equity of 80,000 has to cover the incidental purchase costs and "moving-in expenses," and some say here: salary x 100 or 110 as the financing sum. That would be 560,000-600,000€. So that is already tight to hardly feasible.

With that, of course, I would currently rather tackle a somewhat more upscale property

Then I would advise to stick first to what you can generally afford. (Strange: in recent days there have been questions here implying that the questioners and future builders want to build _more_ and more expensively than they can afford. Possible KfW funding is then used to compensate for a multiple of the construction sum. At least it is attempted to be included in the calculation so that one can have more than one can afford.....)

And even if a small or larger windfall should come (now), I would still advise to afford "only" what is affordable.

with a 1% repayment, after which I would simply pay off the rest with the inheritance after 20 years fixed interest period.

As already said: 1% repayment, better leave that to the imagination... when you have a family, there is no room for speculation. That is my opinion.

Many thanks for the tips! Of course, the bank will not take the inheritance into account. Nevertheless, I can include it in my calculation and thus keep the rate as low as possible.

Nothing is certain, that is true. But without going further into the family situation, I will inherit this extremely surely (both parents are unfortunately no longer able to do anything and I have the will). Hopefully later rather than sooner, but still definitely. This way, one could finance a 600-700k property with a rate of €1,500 and a residual value of 50% after 20 years with these values. That can then easily be repaid immediately from the inheritance.

I would simply try with some banks if I were you. Probably then rather the local main banks.