ᐅ Own Property from the Start? A Beginner Needs Straight Talk...
Created on: 20 Aug 2016 18:35
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Titus72
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
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
S
Sebastian7922 Aug 2016 11:12Some people are just so greedy; they want ultra-low interest rates, but those are only available with fixed terms of 5 to 10 years.
There have been warnings for a long time that after 10 years, the market will be flooded with properties coming from foreclosures and similar situations—but that never actually happens. The often-expected interest rate turnaround hasn’t occurred either.
We also have a fixed interest rate until the end— I don’t care how much extra money I spend for that security, as long as I can live with it and at least have that certainty.
And our net income is lower too, and we borrowed almost 400,000 (400k).
There have been warnings for a long time that after 10 years, the market will be flooded with properties coming from foreclosures and similar situations—but that never actually happens. The often-expected interest rate turnaround hasn’t occurred either.
We also have a fixed interest rate until the end— I don’t care how much extra money I spend for that security, as long as I can live with it and at least have that certainty.
And our net income is lower too, and we borrowed almost 400,000 (400k).
Steffen80 schrieb:
Neither an income of 3,200 nor a fixed interest rate for 26 years makes senseWho exactly are you comparing yourself to? I understand that I can’t compete with department heads or other management positions. But the average worker often earns significantly less. Anyway.
Why shouldn’t such a fixed interest rate be good? Of course, it would be unwise to negotiate this through a single loan. You really need to come up with some solid financial models.
According to statistics, the average gross income of a German citizen is 41,000 per year. For an average employee, this means about 2,000€ net per month.
So, earning 3,200€ net per month is not a large amount, but it is still above average.
Fixed-rate loans over a long term certainly cost more, but if you want to play it safe (and with 3,200€ net, I would probably prefer that), you have to pay more overall. However, you get a predictable risk throughout the financing period. It’s always like this with money: those who can afford to take risks can better capitalize on advantages. Those who need predictability and want to reduce risk have no choice but to pay for it.
This is partly why the wealthy keep getting wealthier, while those who just manage to get by can’t really compete.
So, earning 3,200€ net per month is not a large amount, but it is still above average.
Fixed-rate loans over a long term certainly cost more, but if you want to play it safe (and with 3,200€ net, I would probably prefer that), you have to pay more overall. However, you get a predictable risk throughout the financing period. It’s always like this with money: those who can afford to take risks can better capitalize on advantages. Those who need predictability and want to reduce risk have no choice but to pay for it.
This is partly why the wealthy keep getting wealthier, while those who just manage to get by can’t really compete.
Climbee schrieb:
So, earning a net income of 3,200 per month may not be generous, but it is above average. I’m 29 years old. I think that’s already a decent salary for my age. I still have a few years to improve my position. Or maybe I’m just too content.
The high costs of fixed interest rates can be kept relatively low with linked home savings contracts. For example, a loan runs for 10 years and is then replaced by a home savings loan. If you’re not satisfied with the interest rate at that point (because it’s still quite low), you can then take out a standard follow-up loan. It’s a somewhat complex financing arrangement and not everyone is comfortable with it. Our loan has 6 components. It took me a while to fully understand it.
Climbee schrieb:
As an IT project manager, you should do that too
(i.e., boost your salary) I'm working on it. But slow and steady wins the race. And after 7.5 hours, I’m allowed to put the pen down.