ᐅ Own Property from the Start? A Beginner Needs Straight Talk...

Hello everyone,

I’m new to this forum and just want to say a friendly HELLO to all.

I already have a fundamental question: Does my dream of owning a home fit into reality from the start? I feel like I haven’t really accepted the price reality yet and am still stuck in the 80s/90s...

But what is this actually about? Well, for years I considered buying a property financially unwise. So, I’m still renting. However, I want to improve my living quality and have been looking for a new apartment for a long time (I live in Braunschweig). And what can I say: I’m frankly shocked by the rent prices in this area. What my wife and I would like doesn’t come under €1200 cold rent, with prices trending higher...

So, like many these days, I started thinking about buying. Naturally, the question arises: what can I afford and what do I want? And here, I think I might still be wearing rose-colored glasses!

About me: male, married, children planned soon
Net income about €5200–5400 (depending on the number of shifts) working 60–70 hours a week
(in the coming years, the salary will increase due to experience and step raises), no bonuses or similar, no Christmas bonus, etc.

My fixed monthly costs are around €3800
This includes a monthly savings rate of €1400
Current warm rent including electricity is €830
Still need to consider monthly living expenses like groceries, etc.

My own equity currently amounts to about €80,000, but it’s tied up and not currently freely available, so let’s say my equity = €0, oops.

Looking at property prices in our region (Braunschweig), I’d have to budget around €350,000–450,000 for an average single-family home. And I always wonder: who can afford this immediately?? I know I’m lucky to be among the higher earners. And when I see on radio, film, or TV the kind of houses some people live in (who earn significantly less than I do), I’m amazed. How do they manage it: great house, nice car, good clothes, etc.?

To be clear: this is not envy, I truly wish everyone well. My question is always: why can’t I afford it? Where am I miscalculating, where is my mental block? Apart from a car loan, I have no debts and don’t live extravagantly...

So, who among you experienced folks can help me see things clearly or take off my rose-colored glasses?

Best regards,
Titus72

Hello, what are you planning to do with the remaining money from 5300 minus 3800, which is 1500? That amount seems to disappear somewhere in your calculation. Since the savings rate is not 2900 (5300 minus 2400) but actually 1400, can we assume that you are spending the 1500?

Does your wife work?

Regarding your question: YES, building is incredibly expensive, buying is generally somewhat cheaper but usually comes with compromises.

Even with zero equity, you can afford to build a house. The 80,000 will likely be free at some point and can later be used for large additional repayments or to pay off remaining loans, for example.

By the way, I walked through a new housing development today, and sometimes the houses and the cars parked in front of them are quite astonishing.

My fixed monthly expenses amount to about €3800
this includes a monthly savings rate of €1400
current rent including utilities and electricity is €830
monthly living expenses like groceries etc. are not yet included.

My equity capital currently amounts to about €80,000, but this is tied up and not freely available at the moment, so I would say: equity capital = €0 ops:

I don’t understand... are rent, food, etc. not included in this €3,800 fixed expense?

To me, you have €80,000 in equity; why is that not accessible? Basically, you have an advantage of a very high income. What surprises me is the relatively small savings rate. You shouldn’t have any time at all to spend that money.

Owning a home often means making sacrifices: a smaller car, fewer vacations.

Full quote replaced by direct address from @Neige
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Hello @Titus72

1. Many people are currently building beyond their means because of the low interest rates. The harsh reality will come once interest rates rise, which will happen eventually. You don’t have to fall for this nonsense.

2. You have a fairly good standard of living, at least based on your expenses. Key point: compromises.

3. You are undervaluing yourself. Your net income isn’t top-level but it is quite high and well above average. If your wife also works, a family net income of 7000+ should be achievable. Especially as a doctor (a secure job), you can currently finance quite large amounts without financial pain. A loan of 500,000 to 600,000 could be possible.

Best regards, Steffen

5k net? Wow, that’s really good money. I’m at 3.2k and already consider myself very well paid.
If I manage to cover my loan and fixed costs with my salary, you can definitely do that with yours.
I never really understand what everyone here is worried about regarding potentially rising interest rates later on. Do you think most people take out loans without a fixed interest rate? Our interest rate is fixed until the end of the loan term (26 years).

Evolith schrieb:
5k net? Wow, that’s really good money. I earn 3.2k and already consider myself to be well paid.
If I can manage to cover my loan and fixed costs with my salary, you can definitely do it with yours.
I never understand what everyone worries about regarding possibly rising interest rates in the future. Do you think most people take out loans without fixed interest rates? Our rates are fixed until the end of the loan term (26 years).

Neither is 3.2k considered well paid, nor is a 26-year fixed interest period advisable.