The annoying topic - Is the construction project affordable?

Hello everyone,

my girlfriend (29, teacher) and I (29, business informatics specialist) would like to start building next May. We are currently checking out various prefabricated house providers and will then also visit the solid house builders as well as independent architects. However, before we plan in unrealistic "spheres," we would like to ask you for advice. Specifically, we want to find out "how much house" we can actually afford and what, according to your experience, the limit will be for us. For this reason, here are the details:

Income (net):

[*]She: monthly 1,950 EUR, one-time 900 EUR
[*]I: monthly 3,000 EUR, one-time 3,000 EUR + overtime
[*]Total: monthly 4,950 EUR, one-time 3,900 EUR + overtime

Equity:

[*]She: 7,000 EUR (just recently finished her trainee teaching phase)
[*]I: 20,000 EUR (bought a car for about 38,000 EUR about 1 year ago)
[*]Total: 27,000 EUR

Expenses:

[*]IT costs (mobile phone contract, web presence, etc.): 36 EUR
[*]Cold rent: 550 EUR
[*]Additional rent costs: 200 EUR
[*]Household expenses (food, TV license, electricity, dog, "shared pocket money"): 510 EUR
[*]Membership fees (animal helpers, ADAC): 12 EUR
[*]Vehicle tax: 18 EUR
[*]Fuel costs: 260 EUR
[*]Train ticket: 210 EUR
[*]Pay-TV: 40 EUR
[*]Insurance - full car insurance: 105 EUR
[*]Insurance - supplementary health insurance: 17 EUR
[*]Insurance - private pension: 112 EUR
[*]Insurance - private protection: 36 EUR
[*]Insurance - Riester pension: 255 EUR
[*]Insurance - accident: 30 EUR
[*]Pocket money buffer (fun) - 800 EUR
[*]Total: 3,191 EUR

Savings rate:

[*]She: monthly 500 EUR by standing order to a savings account
[*]I: monthly 1,500 EUR by standing order to a savings account
[*]Total: 2,000 EUR

As you can see, the buffer for pure "fun" of 400 EUR per person per month is very generously sized. We definitely do not spend that.

Furthermore, we are planning to have a child in the next 3–5 years alongside building the house.

So far, we have only spoken to a savings bank about our plans. The savings bank considered a building project "with all bells and whistles" for 450,000 EUR very ambitious and said that we should not think about that currently and should first bring at least 20% equity.

The construction advisor, on the other hand, said that this is "typical for savings banks," pointed out that we have a total net income of about 5,000 EUR, and that construction costs increase by about 3-4% per year. Furthermore, she said that we should rather first speak with an independent financing advisor.

Speaking of the building project. Based on an offer from Bien-Zenker, the following cost blocks resulted:

[*]Plot of land - 40,000 EUR (800 m²)
[*]Additional building costs - 80,000 EUR (including paving and garden design)
[*]House - 300,000 EUR (ready for expansion)
[*]Garage + carport - 15,000 EUR
[*]Total: 405,000 EUR

Additionally probably (???):

[*]Furniture 40,000 EUR (especially kitchen)
[*]Own work on interior finishing (puttying, wallpapering, floor/wall coverings) - ???
[*]Total: 40,000 EUR + X

Our questions now are:

[*]Based on the calculation shown above - what can we realistically afford and
[*]how much equity should we bring or
[*]how long should we wait?
[*]Is it feasible to start such a project next year?

So far we have only spoken to one savings bank about our project. The savings bank described a construction project "with everything included" for 450,000 EUR as very ambitious and said that we should not think about it at the moment and that we should first bring at least 20% equity capital.

The construction advisor, on the other hand, said that this is "typical savings bank," pointed out that we have a total net income of about 5,000 EUR and that construction costs increase by about 3-4% annually. Furthermore, she said that we should rather first talk to an independent financing advisor.

The income is good; one should not be dazzled by it considering the financing needs. Therefore, I would recommend taking the word of the savings bank person very seriously.

Alternatively, a smaller house that would require less financing would be an option.

The construction advisor's pessimism should be ignored.

Ultimately, nobody cares what has happened to your situation in 10 years. The equity capital should not really be used as equity capital yet. It is a reserve/puffer. So it will probably be a 100%+X financing anyway because the current capital will not or at best only cover the incidental costs, which means higher interest.

Hello,

I would like to point out that with a child, probably one partner will go part-time. In addition, there are nursery fees etc.

You should factor that into your life planning and then draw the "line" on what is available.

If you then, for example, only have 4k net and nursery fees, private health insurance etc. are hanging over you, financing 450k is tight.

Then there is no fun money in the household.

Pretty demotivating, the whole thing. Actually, we had hoped to be on a good path with our current income. After all, we are both still under 30 and the next salary increases are sure to come. It's the same for my girlfriend, we are already waiting for her civil servant status, which will then add another €300 net per month (adjusted for private health insurance). If I read this correctly, we should bring at least €90,000 - €100,000 of equity for a volume of around €450,000, is that correct? That would mean another approximately 3-5 years from now. With that, we can put our ideas of owning a home on hold for the time being and shelve the topic. Too bad. :-(

Hello,

I see it exactly the other way around. Equity is probably important, but the higher the income, the more the priorities shift.

We financed 450,000 euros, but our income is 1,000 euros higher than yours.
And we already have one child, including the knowledge of what that costs.

But in my opinion, it makes no sense to save for, say, 3 years to then enter the race with 50,000 - 60,000 euros more equity. If the interest rate is then only 0.5% higher than currently, all equity is eaten up (and meaningless). Not to mention the increased construction costs. What benefit would I have had then? But this only works if the income is high enough and secure.
And what I must of course mention is that this is my subjective opinion!

So I would be on the side of the construction advisor (in your case).

Best regards

€450,000 loan means at least €2,000 per month to the bank. In addition, there are maintenance costs and the reserve fund. Due to the low equity, the interest rate inevitably gets worse. This relativizes the income, as already mentioned above.

What you ultimately make of it is your business. Counting money you don't have yet is by far the worst approach.