What can we finance?

2019-01-24 09:14:45

If I wanted to rent the mentioned nice apartment in my city, I would have to spend my mortgage payment as cold rent (I have already seen a terraced house 90m², small garden for the money, great!). For the interest I will (initially) pay, I could barely rent a Plattenbau apartment (cold). It is also noisy in my place, I hear way too much from the neighbors for my taste, below me they smoke almost at any time of the day... oh no, I am really looking forward to having my own place and I think I will be better off than with a rental apartment. Ultimately also financially. The OP should also be able to manage his interest payments well below the mentioned rent. (750k€ loan at 2% - 1250€ per month)

You underestimate the scale of the construction sum here. With that equity, one should not amortize at 2%. And with more than 80% loan-to-value, the interest rates are not great either. If the rent were around 2,000€, the comments would also be different. In this situation, everything speaks in favor of buying land without immediate construction measures. And just because the bank says financing is not a problem does not mean that everything is optimal. The risk is always borne by the borrower. Not the evil bank.

2019-01-24 09:22:25

The original poster should also be able to manage significantly below the mentioned rental apartment with his interest. (750k€ loan at 2% - 1250€ per month)

However, a purely economic consideration is not about breaking even here.

Just as a counterexample: How many apartments for renting could one have purchased with the equity, and where would the personal wealth be after the repayment phase compared to the situation where one has paid off their own home? Exactly!

Economically, the equity return in owner-occupied homes is in most cases amazingly poor.

It's also noisy for me, I hear far too much from neighbors for my taste, practically smoking below me at almost any time of the day... oh no, I'm really looking forward to owning something myself and I think I'll be better off with that than with a rental apartment.

All good and valid arguments in favor of owner-occupied property.

Ultimately also financially.

If you had borne the same savings rate (= repayment) anyway, I disagree. If forced savings through the loan contract have psychological advantages, it looks different again.

2019-01-24 09:25:32

In this constellation, everything speaks in favor of purchasing land without immediate construction measures.

I can only reaffirm that. The land is, in the worst case, value-stable, but it is more likely that it will appreciate over time. This increases the equity until construction. In addition, when buying land and building a house as clearly separate projects in time, one saves taxes, if I am not mistaken? At these amounts, that would be more than just peanuts.

2019-01-24 09:43:03

Besides, when buying land and building a house as clearly separate projects in terms of time, you save taxes,

You mean the real estate transfer tax, right?
Isn't it the case that even if you build immediately, only the land is taken as the basis, as long as you don't buy the land from the builder (developer) who also builds the house? So basically, as long as there are two clearly separate purchases (even if they are close in time), only the land counts as the basis for calculation?!

2019-01-24 09:50:56

You mean the real estate transfer tax, right? Isn't it the case that even if you build immediately, only the land is taken as the basis, provided you do not buy the land from the contractor (developer) who is also building the house? So basically, as long as there are two clearly separate purchases (even if they are directly close in time), only the land counts as the basis for calculation?!

That's correct

2019-01-24 12:56:56

If the rent were 2k€, the comments would be different.

I was referring to the rent of a four-room apartment that was mentioned (which would apparently be needed if the family grows), not to the current apartment – which is of course unbeatable in terms of price.

So I don’t want to advocate a rushed purchase here, I wrote earlier that no one can take away the risk assessment. That enormous sums also have to flow into the repayment is clear. This is a huge project.

I also think the idea of acquiring the land now and waiting a little longer to build is good. How much does the land itself cost?

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What can we finance?

Zaba12

chand1986

chand1986

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CrazyChris

Altai