We want to build - What do you think about the possible financing?

Hello forum,
First of all, a few details about us. My wife is 25 and I am 29, we want to build a house in about 2 years. We have a daughter who is 2 months old. At the moment we live in a condominium purchased in August 2009.

Facts:
My salary 2250,-
Wife's salary 1100,- (after parental leave in 2 years)
Child benefit 184,-

Condominium purchase price 2009 was 145,000,-
Loan amount 120,000,- of which about 20,000,- will be paid off by the start of construction in 2014
Equity today about 15,000,- in 2014 about 25-30,000,-
Monthly costs for the condominium 1,050,- for interest/repayment and additional costs

Unfortunately I still have a car loan of about 18,000,-.

What do you think, is building a house feasible under such financial circumstances? And how high would you estimate our creditworthiness?

Looking forward to your opinions

By the way, the building plot we have in mind is very cheap at 31,500, but quite narrow at 13.20m x 25.30m. Adjacent to it is an equally large plot that is still undeveloped, which could double the plot to 26.40m x 25.30m. The first plot is being sold by the Sparkasse without commission. The second is private; I would first have to find out if it is for sale. With the solution of the two building plots, we would build without a basement to be able to finance a bigger house and a large garage.

With your low current income (without the girlfriend's income), I wonder how you are already paying for this?

Are you selling the condominium, and how much money can be expected from that? Why don’t you put equity into the loans to pay them off faster instead of just working to pay the interest?

I’m not a professional, but I don’t think you will get more money to build again. If so, only at high interest rates with low repayment.

Then in 5-10 years, when you enter the new negotiation round and maybe pay 2% more interest, you won’t be able to pay your monthly installments anymore and will have to sell and end up with nothing.

As I said, I’m not a professional, this is my opinion, but with [150,000] in debt you don’t have to be a professional!

Assuming you have repaid 20,000 EUR in 5 years (by 2014), with an interest rate estimated favorably at 4.5%, I come to a monthly rate of 740€. If you want to save another 10,000 EUR in the following two years, you need to set aside about 400€ monthly. Does that reflect the facts: Respect!

You should evaluate(!) sensibly how much you will get for the apartment. Are you making a profit or loss? I think you can be happy if the incidental costs of the purchase (commission, fees, land transfer tax) have paid off.

In the end, you will stand there with your salary. Your savings offset the car loan. 10-20,000 EUR plus/minus because of the sale of the apartment.

What I would advise everyone: Put savings into the loan. I doubt that you will make more return from saving after deducting all costs than the loan costs you. However: the costs for investments that currently exist have already been paid. You have to calculate whether it is worth continuing to save or not. Concluding new contracts would not.

I currently cannot imagine (also from my own experience) that you can finance this seriously.

Because you always have to keep in mind. The apartment must also be sold first.
Then you first need a rental apartment for the time during construction.
Etc.
How high is the wife's current income (parental allowance ???).
How high is the car payment?

Hello and many thanks already for the opinions so far.

Regarding the first question of how I am already financing this. During parental leave you don’t get nothing ;-) At the moment it is about 750,- plus 184,- child benefit. From the second year on we only receive child benefit. That’s why construction will only start in 2014.

Ok, to weigh all the numbers against each other and to simplify the whole thing, here is the following situation.

Value of apartment "realistically" estimated about 155,000€
Outstanding loan amount in 2014 about 100,000€

Equity remains at 15,000€ until 2014 but should not be included in the financing.

At the start of construction 2014:

Two full incomes with child benefit of about 3,500€
15,000€ emergency fund
Difference amount of 55,000€ (to be counted as equity?!?) value apartment/outstanding loan amount.

So
Equity 55,000€
Salary 3,500€
Minus residual car loan 2014 about 12,000€. Installment 300€/month.

Despite leaving out the current and future equity until 2014, the numbers don’t look that bad.

Any further opinions?