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
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Steffen8022 Aug 2016 13:41Great how analytically you can capture this. Applause..
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Sebastian7922 Aug 2016 14:00Of course, you can always take that into account, but I’m not holdinɡ a grudge.
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Knallkörper22 Aug 2016 14:33State the €80,000 as equity or security. If you then finance an additional €400,000, for example, at an approximate nominal interest rate of 1.4% over 10 years, the risk of a shorter fixed interest period can be managed given your circumstances. The monthly payment will be around €1,500 (about $1,600), and you will be finished paying off in 27 years. If you retire in 23 years, due to inflation, the €1,500 (about $1,600) won’t feel like such a large amount anymore. You can also handle an interest rate increase of 2% or more; at least, you won’t have to declare bankruptcy then. I’m not looking through rose-colored glasses here. Our situation was very similar when we made this decision recently.
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Miyagi081522 Aug 2016 15:36Titus72 schrieb:
This includes a monthly savings amount of €1400 (about $1500)...
When I watch TV or movies and see the kind of houses some people live in (earning significantly less than I do), I’m really amazed. How do they manage it: great house, nice car, good clothes, etc.
To be clear: this isn’t envy, I genuinely wish it for everyone. My question is always: why can’t I afford the same? Where am I miscalculating, where is my mental block? Apart from a car loan, I have no debts and I don’t live extravagantly... You have actually answered your own question in your comment.
Save less, spend more...
I consider a loan of up to €400,000 - 500,000 (about $430,000 - $540,000) to still be reasonable under these circumstances.
Hello everyone,
first of all, thank you for your replies.
Regarding my numbers once again: my wife has registered a small business (she offers fitness classes, earning about 400–500 euros per month, but her time is limited due to planning for children).
@f-bNO about the fixed costs: 3,800 euros (this includes rent, savings contributions, private health insurance, car loan payment, financial support for my mother, insurances, rent plus utilities, phone).
Costs for groceries, leisure activities, etc. are not included.
By the way, I don’t drive a Porsche, Mercedes, or any luxury car, and I don’t go on vacation three times a year (this year just one week cycling vacation in Mallorca...). I also don’t eat out every weekend.
The 80,000 euros are invested in equity funds and stakes in medium-sized companies (currently doing quite well).
I will take another look and recalculate.
I am a bit old-fashioned when it comes to finances. That means I generally don’t like loans. Either I can afford something or I save up until I have the full amount (the only exception was the car loan... oops). At the end of the month, I always keep a certain “safety cushion” in my checking account. Otherwise, I don’t sleep well. I’ve only ever overdrawn my account once in my life (by 50 euros). As I said, quite old-fashioned.
Despite everything, thank you for your honest answers...
first of all, thank you for your replies.
Regarding my numbers once again: my wife has registered a small business (she offers fitness classes, earning about 400–500 euros per month, but her time is limited due to planning for children).
@f-bNO about the fixed costs: 3,800 euros (this includes rent, savings contributions, private health insurance, car loan payment, financial support for my mother, insurances, rent plus utilities, phone).
Costs for groceries, leisure activities, etc. are not included.
By the way, I don’t drive a Porsche, Mercedes, or any luxury car, and I don’t go on vacation three times a year (this year just one week cycling vacation in Mallorca...). I also don’t eat out every weekend.
The 80,000 euros are invested in equity funds and stakes in medium-sized companies (currently doing quite well).
I will take another look and recalculate.
I am a bit old-fashioned when it comes to finances. That means I generally don’t like loans. Either I can afford something or I save up until I have the full amount (the only exception was the car loan... oops). At the end of the month, I always keep a certain “safety cushion” in my checking account. Otherwise, I don’t sleep well. I’ve only ever overdrawn my account once in my life (by 50 euros). As I said, quite old-fashioned.
Despite everything, thank you for your honest answers...