Hello everyone,
I would like to ask for some advice from experienced forum members regarding whether my building plans are reasonable.
A brief overview of our situation.
I am 33, my wife is 33, and we have a 3-year-old daughter. We want to build a bungalow of about 150m2 (1,615 sq ft). I have a plot of land measuring 649m2 (6,985 sq ft). We would also like to have around 100m2 (1,076 sq ft) of garden space next to the house.
Income:
Me: 3,000 €
Her: 1,900 €
Equity: 45,000 €
Savings: 20,000 €
We have an offer for a prefabricated house at 310,000 € exactly as we want it. Including all costs (land/ notary/ landscaping/ foundation/ house, etc.), we have planned a budget of 485,000 €. We intend to repay this with about 1,400 € monthly.
1. Question: Is the plot large enough for our needs?
2. Question: Is our budget plan reasonable and realistic?
The representative from the prefab house company said it is very likely. BUT I would really appreciate a “neutral” professional opinion as well.
Many thanks in advance for your feedback.
Best regards,
Andreas
I would like to ask for some advice from experienced forum members regarding whether my building plans are reasonable.
A brief overview of our situation.
I am 33, my wife is 33, and we have a 3-year-old daughter. We want to build a bungalow of about 150m2 (1,615 sq ft). I have a plot of land measuring 649m2 (6,985 sq ft). We would also like to have around 100m2 (1,076 sq ft) of garden space next to the house.
Income:
Me: 3,000 €
Her: 1,900 €
Equity: 45,000 €
Savings: 20,000 €
We have an offer for a prefabricated house at 310,000 € exactly as we want it. Including all costs (land/ notary/ landscaping/ foundation/ house, etc.), we have planned a budget of 485,000 €. We intend to repay this with about 1,400 € monthly.
1. Question: Is the plot large enough for our needs?
2. Question: Is our budget plan reasonable and realistic?
The representative from the prefab house company said it is very likely. BUT I would really appreciate a “neutral” professional opinion as well.
Many thanks in advance for your feedback.
Best regards,
Andreas
Do you think you can manage a 2000 € (about 2200 USD) installment? (I believe you can, but I don’t know your expense structure) — 1400 € (about 1540 USD) would be too low for me.
The plot should yield 100 m² (about 1076 sq ft)… although I also don’t know how, where, or what exactly (all of that information is missing).
The plot should yield 100 m² (about 1076 sq ft)… although I also don’t know how, where, or what exactly (all of that information is missing).
BeHaElJa schrieb:
Do you think you can afford a €2000 (about $2200) monthly payment? (I believe you could – but I’m not familiar with your expense structure) – €1400 (about $1500) would be too little for me.With a 2% repayment rate, a monthly payment of around €1500 (about $1650) is possible. It’s best to start small, include a 5% annual prepayment option, and get through the first 2-3 years. After that, things should settle down, and there should be enough left for additional lump-sum payments or to increase the repayment amount.
If I assume €440,000 with €1,400 per month at a reasonably low 2% interest rate until the end of the term, you’re looking at 38 years – so by your 71st birthday.
At €2,000 per month, it would be 23 years – so until you’re 56.
Of course, you’ll earn more later and make extra repayments diligently... but just saying.
At €2,000 per month, it would be 23 years – so until you’re 56.
Of course, you’ll earn more later and make extra repayments diligently... but just saying.
G
garfunkel28 May 2016 00:30I wouldn’t recommend financing that relies on the assumption that you’ll make extra repayments every year in order to finish within a reasonable time. In my opinion, it’s simply unrealistic to believe that interest rates will remain this low for the next 20-40 years. I think that’s a risky bet. It can quickly backfire if, after 10 years, rates go back up to 7% or higher.
I also wouldn’t count on earning significantly more in the future to cover the financing. While that might happen, the relationship to living costs won’t necessarily improve much compared to now.
I find loans longer than 20 or 25 years are not very sensible. That’s a heavy burden to carry for so long. But with the current income situation for both of you, it should be manageable. However, you should also consider what would happen if one of you loses their income for an extended period. Would you still be able to afford it? This is especially important if you’re both around 50 years old. At that age, it can be difficult to find a new or well-paying job, and if you still have a large remaining debt, you could get into trouble—which is exactly what you want to avoid at that stage in life.
Personally, I would plan financing so that I finish—or almost finish—paying off the property by the time I’m 50 years old. Otherwise, I consider it too risky, and the value generated wouldn’t be high enough for me. I also prefer investing in an apartment since I simply don’t need a house. That suits me fine: I can afford it comfortably and don’t have to compromise on leisure activities, vacations, or other enjoyable things that cost money. Plus, I finish paying in well under 20 years. That’s just my preferred way of living, but everyone has to decide that for themselves.
To answer the questions:
A 650m² (7000 sq ft) plot should easily accommodate your needs:
- 250m² (2700 sq ft) house
- 36m² (390 sq ft) double garage
- 36m² (390 sq ft) driveway
- 50m² (540 sq ft) terrace
- 310m² (3300 sq ft) garden
(This depends on your specific plans, of course.)
I find the price expensive—am I mistaken? Do you have a basement or any special features included? Honestly, I’m not very familiar with this, but does a single-story house or bungalow really cost that much? How do other offers compare?
I think you should carefully consider your financing approach. According to the rule of thumb for rent, your rent shouldn’t exceed one-third of your income, which in your case would be around €1633. For a mortgage, you can probably afford a bit more since it’s your property. Maybe up to €2000, which would mean paying for 20 years. But that only works if everything stays as is.
I know two cases among friends where the monthly installment became an ever-present burden. When vacations have to be skipped, hobbies cut back, or overall quality of life suffers, it no longer feels pleasant.
P.S.: Are the salary figures net or gross? I don’t want to cause unnecessary worry—chances are you can afford this. But you should know exactly what you’re getting into and avoid rushing.
I also wouldn’t count on earning significantly more in the future to cover the financing. While that might happen, the relationship to living costs won’t necessarily improve much compared to now.
I find loans longer than 20 or 25 years are not very sensible. That’s a heavy burden to carry for so long. But with the current income situation for both of you, it should be manageable. However, you should also consider what would happen if one of you loses their income for an extended period. Would you still be able to afford it? This is especially important if you’re both around 50 years old. At that age, it can be difficult to find a new or well-paying job, and if you still have a large remaining debt, you could get into trouble—which is exactly what you want to avoid at that stage in life.
Personally, I would plan financing so that I finish—or almost finish—paying off the property by the time I’m 50 years old. Otherwise, I consider it too risky, and the value generated wouldn’t be high enough for me. I also prefer investing in an apartment since I simply don’t need a house. That suits me fine: I can afford it comfortably and don’t have to compromise on leisure activities, vacations, or other enjoyable things that cost money. Plus, I finish paying in well under 20 years. That’s just my preferred way of living, but everyone has to decide that for themselves.
To answer the questions:
Nigrin schrieb:
1. Question: Is the plot sufficient for our needs?
A 650m² (7000 sq ft) plot should easily accommodate your needs:
- 250m² (2700 sq ft) house
- 36m² (390 sq ft) double garage
- 36m² (390 sq ft) driveway
- 50m² (540 sq ft) terrace
- 310m² (3300 sq ft) garden
(This depends on your specific plans, of course.)
Nigrin schrieb:
2. Question: Is our budget planning reasonable and realistic?
I find the price expensive—am I mistaken? Do you have a basement or any special features included? Honestly, I’m not very familiar with this, but does a single-story house or bungalow really cost that much? How do other offers compare?
I think you should carefully consider your financing approach. According to the rule of thumb for rent, your rent shouldn’t exceed one-third of your income, which in your case would be around €1633. For a mortgage, you can probably afford a bit more since it’s your property. Maybe up to €2000, which would mean paying for 20 years. But that only works if everything stays as is.
I know two cases among friends where the monthly installment became an ever-present burden. When vacations have to be skipped, hobbies cut back, or overall quality of life suffers, it no longer feels pleasant.
P.S.: Are the salary figures net or gross? I don’t want to cause unnecessary worry—chances are you can afford this. But you should know exactly what you’re getting into and avoid rushing.
Similar topics