Tips/Opinions on Planning

Hello everyone,

I am looking for some opinions on our planning. I want to buy a house from the family together with my girlfriend and renovate it according to our wishes.

Net income:
Together 3700€

We haven't been living in a shared apartment for very long yet; before that, we had two separate households:
Currently, we only have the household budget for the shared expenses:

Cold rent 400€
Additional costs 125€
Electricity 36€
Internet, TV, GEZ 18€
Insurances 25€
Groceries 300€
Buffer for purchases 50€
= 954€

This is also managed through a joint account.

So far, we handle personal things like car, retirement provisions, etc. separately.
I don’t have an exact history here; we both started using a household budget last month. Therefore, I would add the following costs (together):

Mobile phone 60€
Cars 400€
Fuel 150€
Insurance / retirement provisions 300€
Entertainment 400€
Buffer 100€
= 1410€

This currently results in a rather theoretical surplus of about 1300€
We have been saving 800€ without problems into a daily allowance account for 2 months.

I see myself that we first need to get a clear overview of our finances. That will follow.

Now to the plan regarding the house.
As said, the house comes from the family and is partly an inheritance.
We have to pay 120,000€. The broker currently valued it at 230,000€.
Built in 1980 in a great residential area on a play street.

Of course, we would like to change many things. I have a fairly detailed list and come up with renovation costs of around 100,000€. I would like to add a buffer of 10,000€, so 110,000€ for the renovation. (Costs for the kitchen are already included)

Let's come to the topic of equity. Currently, we have 12,000€, which of course will increase monthly.

The planned start is in about a year. I think we can then talk about 25,000€.

Purchase price 120,000€
Renovation 110,000€
Furnishing / miscellaneous 15,000€
= 245,000€
- 25,000€ equity

Results in a financing amount of 220,000€ Is this realistic with our income?
Is the low purchase price compared to the value of the property an advantage with the bank regarding the conditions for a loan?

920 € burden per month at 5% p.a. is feasible. To what extent the renovation costs should be credited as value-enhancing you should inquire - we had the experience that these are only partially recognized. I would probably have a renovation report prepared and then go to a bank advisor who has a lot of knowledge about funding possibilities from [Bafa] and [KFW].

920€ / month at 5% ??

I don’t think you mean either repayment or interest rate... Can you explain?

He means 5% total interest and repayment, e.g. 2.5 interest and 2.5 repayment.

If the current market value of the property set by the broker is realistic, then the low purchase price of €120,000 is of course advantageous. The property value will be significantly included in the bank's calculation, as your equity is very low. The renovation of the house – assuming proper planning and documentation – naturally has an additional value-increasing effect. The value of the property should then be calculated correspondingly higher after the renovation, which would therefore also be economically sensible from that perspective.

How high the actual renovation costs will be can only be calculated after an inventory, depending on the condition/pending maintenance and the remodeling and expansion wishes. An energy-efficient renovation is likely to be an issue including the heating system. In the case of a complete house renovation, KfW funds/grants are also interesting.

In which "nice residential area" is the house located? How large is the NNF (net usable area = living and usable space)?

The house is located in 46395 Bocholt in a good location. The usable area is 135sqm spread over 1.5 floors with a full basement. The heating system (gas with underfloor heating) is 5 years old. The renovation naturally also includes many "Nice-to-have" things such as new tiles, new bathroom, etc. Energy-wise, intermediate and sub-rafter insulation for the roof, basement ceiling insulation, and completely new windows + front door are planned.