We are beginning to plan the construction of our house

1.) How do those of us who, as is more common nowadays, fully finance, i.e. buy or build a house without equity, do it?

It may happen more often in the sense that it is not uncommon. "According to an analysis by the mortgage broker Dr. Klein on behalf of the business magazine 'Capital' (issue 9/2014, release date August 21), the proportion of property financings with less than ten percent equity of all financings has almost halved in the last ten years from 31.2 percent to currently 17.6 percent." Basically, it is of course possible with corresponding salaries. With a net income of €3,700 and a desired installment of €800-1,000, it would probably be tight but not impossible.

Are the interest rates for this loan amount really that bad?

It's doable, not that bad, but definitely higher than with a better equity ratio. Below is just an example. Your individual interest rate may well be higher. Your bank/financial advisor will provide you with more information. However, you can expect to pay an interest rate 0.5-1.5% higher with full financing. Loan-to-value¹ Nominal² Effective³ up to 50% 1.73 1.76 up to 70% 1.78 1.82 up to 80% 1.85 1.88 up to 90% 2.04 2.07 from 90% 2.46 2.50

Who today brings that much equity if they don't want to build only when they are older or get it from somewhere else.

That is exactly the point that brings many homebuilders to despair. The dream of owning your own house is there, but where is all the money supposed to come from? Many start saving early and then borrow a bit from the family. Several tens of thousands cannot be saved up within one year.

And I know many "young people" (25-30 years) who have built without having received much money as a gift.

Then ask these people how they did it.

I can't hear the saying "save money and build equity" anymore. It may fit in theory, but currently should really be weighed carefully. If all the other conditions are right (this has been extensively discussed in other threads), you can take the step. Who, please, brings their own plot of land? That is already a considerable plus point. Additionally, you are planning in low regions, although I am skeptical here that 250,000 euros will be enough. With all the extras and a double garage, you should rather reckon with 300,000 euros.

How did you calculate the value of the plot? A reference point would be, for example, the Boris value, which can be looked up online.

Just ask 2-3 financial institutions about financing without obligation. Even a not optimal interest rate today can be much better than the usual rate in 5 years. (Speculation) Unfortunately, I cannot yet estimate how the new guidelines starting March 21 will affect things. Purely from a feeling, I would say it will be difficult for young couples without equity (then questions like what about family planning will arise) and for older couples whose financing has not been paid off after the term.

Thank you all for your answers,

it all helps me to better understand the whole financing issue.
Soon we will take the step towards the various banks.

Especially regarding the loan-to-value ratio etc., I now have a better overview and can assess it better.
So, up to now I assumed that with my land as equity and a buffer, I would be not super well but also not badly positioned.

At the moment, I am talking more often with various acquaintances who have recently built or are still building, and figures of around €220,000 (without land) often come up. What I have to add is that the exterior plaster and the installations are still missing. Those people have also contributed a lot of personal work and will gradually complete the yard and installations in EL.

Do you have any tips for me on what I could prepare or what would be important for the bank before I go "naively" into this meeting.

- As mentioned, we have recorded living expenses over a longer period.
- We have the land plan and development plan.
- Average income is also known.
- We also have a rough idea of the desired house.

Thanks again

I have so far been with one bank, but for example, they were not interested in the average income. They wanted to see the last 3 pay slips and then used the lowest (!) month in their calculation. Also, when it comes to living expenses, they are relatively unconcerned with how one perceives it oneself. They use their flat rates for that. For example, this bank explained to me that they calculate €900 for living expenses for the main earner and an additional €200 for each additional person in the household. But at least 40% of the family net income, which could be higher than the aforementioned flat rates. The reason for this is that generally, with higher income, the standard of living is also higher.

So far I have been with a bank, but for example, they were not interested in the average income. They wanted to see the last 3 payslips and then used the lowest (!) month in their calculation.

Also, regarding living expenses, they are relatively uninterested in how you see it yourself. They use their flat rates for that.

For example, this bank explained to me that they calculate €900 for living expenses for the main earner and an additional €200 for each additional person in the household. But at least 40% of the family net income, which could possibly be higher than the above flat rates. The reason behind this is that usually with higher income the standard of living is also higher.

Well, real estate financing (single-family house/condominium) is poorly paid mass business today. Therefore, the processes are kept streamlined and the risk buffer for the banks is high. That's the only way it works.

Why do questions about one's own HOUSE always come from such young people? Is affordable property in the form of a condominium no longer desirable nowadays? You could quickly pay off the apartment for €150K, for example, and in a few years have the equity for building a house. A separation or a job-related move or so on is also manageable.....

Hello,
I am not a financial expert, but I can calculate. So here are some suggestions from me that have not yet been mentioned, which you can consider for yourselves.

estimated construction sum €250,000

Your opinions on the ratio of equity to construction sum. How do you assess the project with our income, etc.???

The costs for building a house consist – simplified – of
Land (you have as equity, paid)
Ancillary construction costs (roughly 30,000 + x, where it is not uncommon for x to be five digits)
House construction (- own work)
+ Garage/carport + outdoor facilities (driveway, terrace) + garden landscaping
+ painting and flooring
+ miscellaneous

Own work: floors, painting, landscaping, etc... helping with roofing, masonry, etc., as is common in the countryside.

The materials for floors and painting must be paid for. Kitchen too. If the bank does not co-finance it (concerning the kitchen), then the money must be available. As liquid funds, which are not declared as equity. Materials "increase" the cost of a loan, outdoor facilities etc. as well.
Miscellaneous must also be available as capital. How about the soil survey? Costs about €1,000, in my opinion and that of many builders a MUST and should be commissioned beforehand. The invoice should then be payable out of pocket so that the financing only needs to be used later. This continues with some "small" invoices in advance.

If you build with a general contractor, you probably won't be able to provide own work such as masonry or roofing – there it is about flat rates and insurances. Everything is regulated. Of course, you can exclude trades, but certainly no fundamentals.
An architect house or one by a planner would come into question; masons and roofers in the village club where help can be provided... that also costs, you are allowed to calculate a small wage for your helping activities, which probably counts as very little own work. In addition, the architect also wants to be paid for his services.

Do you have any tips for me on what I could prepare or what would be important for the bank before I go into this appointment "naively"?

For an initial meeting, your information should suffice. If you mention own work, it should be possible to calculate it. You then need to know later how much your own work actually increases the capital significantly. Lots of own work also means, for example, that a longer rental period must be accepted. Whether this pays off... for a month of painting including filling, sanding, and wallpapering you make a profit; nevertheless, a stated construction price usually excludes these works and must be added.

1.) How do those among us who, as is increasingly common nowadays, fully finance, i.e., buy or build a house without equity, handle it?

They often have a better income, which increases liquidity.

And I know many "young people" (25-30 years) who built without having received much money as a gift.

Many people in the circle of acquaintances do not really mention financial boosts from family, nor the hurdles and doubts regarding their financing. Many financings are based on no officially stated desire for children, no double garage, and in case of bottlenecks with the help of relatives.

- As mentioned, we have recorded living expenses over a longer period.

The living expenses you have determined, also including a possible increase due to a desire for children, resulting costs and lower income, are designed to make these eventualities certain for you – for the financer the last incomes + info whether you have a permanent contract and if any loans must be paid off count. As a bonus, there is the sector or civil servant status.

Why do questions about owning a HOUSE always come from such young people?

I wonder about that too. Why is the next goal in life to name ownership or a house as an asset when you have just found your first own steps in your industry? Maybe it’s the current attitude toward life? The lack of goals regarding personality?
I do not want to use you or this thread to question my consideration of whether one should first find other goals for oneself and one’s ego, yet I must say that these/my considerations about your generation of “young people” and the next one somewhat disappoint me.

Nevertheless, you have a plot of land and that is a piece of positive stability, which is very good in turn. You take care of living expenses, that is also very good. So just wait for your meeting, and then we will see further.
It doesn’t have to be a double garage planned right away if a parking space will do!!!