ᐅ Compromises in the Property Location and Initial Questions
Created on: 8 Dec 2016 10:24
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Winniefred
Hello!
I’m new here. I work part-time, and my husband is a full-time IT professional. We have two small children and are both still under 30.
For some time now, we have been considering building a house. Our bank has calculated a possible loan amount of €210,000. We want to keep our monthly payments to a maximum of €1,200 so we can still enjoy a good quality of life, and we want to fully repay the loan in no more than 15 years. We worked with the bank using very conservative assumptions (only one income, no salary increases, etc.) so that we could finance it with peace of mind.
However, in our city, houses like the one we want now cost around €400,000. We’re looking for a house with about 100-140m2 (1,076-1,506 square feet) of living space on a plot no larger than 700m2 (7,535 square feet). We want something modest and standard, with no special demands. Property prices in the city, even on the outskirts, have skyrocketed. Properties under €350,000 usually require extensive renovation, which pushes the total cost back up to €400,000 or more. That sum is simply too high and risky for us. Paying off over 30 years or sacrificing our lifestyle for 20-25 years is not an option. Condominiums aren’t much cheaper either—those typically still cost around €350,000, with no upper limit. In short: everything we can afford is further away than we would like.
My husband’s parents own a plot in a suburb that we could have. On that land, we could build our dream bungalow with our budget of €210,000, including landscaping (at least the paving and a carport; the rest of the yard is fine). The plot is just under 700m2 (7,535 square feet), well-shaped, fully developed with utilities, fenced, and flat. With this plot plus our savings, we would have substantial equity (over 40%) and could finance everything comfortably without stress. We know the area and the neighbors well; my husband grew up there, and we’ve lived there before. There is access to tram, bus, and commuter trains, plus full infrastructure like doctors and schools. The drawback is that it’s 17 kilometers (about 11 miles) from our main city. It’s a nice place, friendly, but it’s simply not “our” city, the one we love. In our city, however, we simply cannot afford anything under our self-imposed conditions. Objectively, nothing speaks against this small town: you can get to the main station in the big city within 15 minutes by commuter train, and a large shopping center is just 10 minutes away.
Have any of you made compromises regarding location? The difference is quite significant. Especially for us, since the plot is already available and wouldn’t need to be purchased for about €130,000 as a similar plot would on the outskirts of the city. And then it would be our dream home, not some awkwardly laid-out second-hand semi-detached house. But is it still reasonable to buy at all? Or would it be better just to remain renters and stay in the city we love? Our current rent is €1,000 all-inclusive, which is actually a bargain for a 102m2 (1,098 square feet) apartment in a nicely renovated older building on the city outskirts. The suburb would be another 10 kilometers (6 miles) further out...
City properties here sell very quickly. There’s no room for negotiation. But once you go to the suburbs or outskirts, prices can be really low.
So as you can see, we’re going in circles. On one hand, we want to own a home. This isn’t driven by fear of rising interest rates—that has always been our wish. On the other hand, we’re afraid to regret compromising on location. But we also don’t want to buy seriously overpriced property that we’d have to pay off for decades. Even if we relaxed our repayment goals, factoring in extra payments, pay raises, and extending the loan term to 20 years, it wouldn’t get us a loan amount of €400,000. Maybe €300,000 to €350,000 max, which would only cover a condominium.
Maybe you have some suggestions or could share your experiences and thoughts.
Thanks!
I’m new here. I work part-time, and my husband is a full-time IT professional. We have two small children and are both still under 30.
For some time now, we have been considering building a house. Our bank has calculated a possible loan amount of €210,000. We want to keep our monthly payments to a maximum of €1,200 so we can still enjoy a good quality of life, and we want to fully repay the loan in no more than 15 years. We worked with the bank using very conservative assumptions (only one income, no salary increases, etc.) so that we could finance it with peace of mind.
However, in our city, houses like the one we want now cost around €400,000. We’re looking for a house with about 100-140m2 (1,076-1,506 square feet) of living space on a plot no larger than 700m2 (7,535 square feet). We want something modest and standard, with no special demands. Property prices in the city, even on the outskirts, have skyrocketed. Properties under €350,000 usually require extensive renovation, which pushes the total cost back up to €400,000 or more. That sum is simply too high and risky for us. Paying off over 30 years or sacrificing our lifestyle for 20-25 years is not an option. Condominiums aren’t much cheaper either—those typically still cost around €350,000, with no upper limit. In short: everything we can afford is further away than we would like.
My husband’s parents own a plot in a suburb that we could have. On that land, we could build our dream bungalow with our budget of €210,000, including landscaping (at least the paving and a carport; the rest of the yard is fine). The plot is just under 700m2 (7,535 square feet), well-shaped, fully developed with utilities, fenced, and flat. With this plot plus our savings, we would have substantial equity (over 40%) and could finance everything comfortably without stress. We know the area and the neighbors well; my husband grew up there, and we’ve lived there before. There is access to tram, bus, and commuter trains, plus full infrastructure like doctors and schools. The drawback is that it’s 17 kilometers (about 11 miles) from our main city. It’s a nice place, friendly, but it’s simply not “our” city, the one we love. In our city, however, we simply cannot afford anything under our self-imposed conditions. Objectively, nothing speaks against this small town: you can get to the main station in the big city within 15 minutes by commuter train, and a large shopping center is just 10 minutes away.
Have any of you made compromises regarding location? The difference is quite significant. Especially for us, since the plot is already available and wouldn’t need to be purchased for about €130,000 as a similar plot would on the outskirts of the city. And then it would be our dream home, not some awkwardly laid-out second-hand semi-detached house. But is it still reasonable to buy at all? Or would it be better just to remain renters and stay in the city we love? Our current rent is €1,000 all-inclusive, which is actually a bargain for a 102m2 (1,098 square feet) apartment in a nicely renovated older building on the city outskirts. The suburb would be another 10 kilometers (6 miles) further out...
City properties here sell very quickly. There’s no room for negotiation. But once you go to the suburbs or outskirts, prices can be really low.
So as you can see, we’re going in circles. On one hand, we want to own a home. This isn’t driven by fear of rising interest rates—that has always been our wish. On the other hand, we’re afraid to regret compromising on location. But we also don’t want to buy seriously overpriced property that we’d have to pay off for decades. Even if we relaxed our repayment goals, factoring in extra payments, pay raises, and extending the loan term to 20 years, it wouldn’t get us a loan amount of €400,000. Maybe €300,000 to €350,000 max, which would only cover a condominium.
Maybe you have some suggestions or could share your experiences and thoughts.
Thanks!
Hello,
I grew up in a big city, but I never really felt comfortable there. Around here, you have to build quite far from Frankfurt if you want it to be somewhat affordable (under 500 euros per square meter). For me, 10-20 km (6-12 miles) is not a long distance; you can easily cycle that. I definitely didn’t want my children to grow up in a big city. Why do you only want to pay off the mortgage in 15 years? You would be paying rent for the rest of your life otherwise.
Best regards
Sabine
I grew up in a big city, but I never really felt comfortable there. Around here, you have to build quite far from Frankfurt if you want it to be somewhat affordable (under 500 euros per square meter). For me, 10-20 km (6-12 miles) is not a long distance; you can easily cycle that. I definitely didn’t want my children to grow up in a big city. Why do you only want to pay off the mortgage in 15 years? You would be paying rent for the rest of your life otherwise.
Best regards
Sabine
Winniefred8 Dec 2016 14:45Thanks in advance for your suggestions!
The plot is not 10 km (6 miles) away, but 17 km (10.5 miles). So it’s about 10 km (6 miles) further out than where we currently live. There’s no gap between the small town and the nearby city anymore; they blend seamlessly into each other. The small town is connected to the city by tram, but the ride easily takes around 45 minutes. But yes, the city is growing. Everywhere farmland is being converted into building land, and every empty space is being filled in.
Fifteen years, because we just want to have it "out of the way" sometime soon. I would never plan for more than 20 years, and neither would my husband. The risk of something happening is just too high, and you can’t protect yourself against everything. As a renter, in the worst case, you can move into an affordable three-room social housing unit until you’re financially stable again. As a homeowner, you take on a completely different kind of commitment. If our children want to do a year abroad or study somewhere else, I don’t want to be stuck calculating whether I can afford it since I still have to pay 1,200 plus additional costs for another 15 years. We also want to enjoy life ourselves and not put all of our income into a house. We both studied for seven years and had lower-paid jobs before, so we know what it’s like to live on a tight budget, and we just don’t want to go back there. That’s why we prefer to plan more comfortably rather than too tightly.
We have lived in this small town before. It’s not a bad place, no. But is “not bad” the right description for the location of our own home? We’re very uncertain about that. Of course, the advantages are obvious. Economically and for the children, the small town would be better. My husband grew up happily there, and we would never get such a great and short financing term without this plot. We’re also aware that this is “complaining on a high level.” Others probably wonder what our problem is and would be glad to have such an opportunity. For others, it would probably be a dream location. But for us, city people, it’s not. The further out in the countryside, the less we can imagine living there long-term. We love going on countryside holidays, but living there permanently wouldn’t even cross our minds.
Developer: No, definitely not. My parents-in-law would much rather sell it themselves then. They would gift it to us only if we intend to use it ourselves. Otherwise, they could really use the money for their retirement.
The plot is not 10 km (6 miles) away, but 17 km (10.5 miles). So it’s about 10 km (6 miles) further out than where we currently live. There’s no gap between the small town and the nearby city anymore; they blend seamlessly into each other. The small town is connected to the city by tram, but the ride easily takes around 45 minutes. But yes, the city is growing. Everywhere farmland is being converted into building land, and every empty space is being filled in.
Fifteen years, because we just want to have it "out of the way" sometime soon. I would never plan for more than 20 years, and neither would my husband. The risk of something happening is just too high, and you can’t protect yourself against everything. As a renter, in the worst case, you can move into an affordable three-room social housing unit until you’re financially stable again. As a homeowner, you take on a completely different kind of commitment. If our children want to do a year abroad or study somewhere else, I don’t want to be stuck calculating whether I can afford it since I still have to pay 1,200 plus additional costs for another 15 years. We also want to enjoy life ourselves and not put all of our income into a house. We both studied for seven years and had lower-paid jobs before, so we know what it’s like to live on a tight budget, and we just don’t want to go back there. That’s why we prefer to plan more comfortably rather than too tightly.
We have lived in this small town before. It’s not a bad place, no. But is “not bad” the right description for the location of our own home? We’re very uncertain about that. Of course, the advantages are obvious. Economically and for the children, the small town would be better. My husband grew up happily there, and we would never get such a great and short financing term without this plot. We’re also aware that this is “complaining on a high level.” Others probably wonder what our problem is and would be glad to have such an opportunity. For others, it would probably be a dream location. But for us, city people, it’s not. The further out in the countryside, the less we can imagine living there long-term. We love going on countryside holidays, but living there permanently wouldn’t even cross our minds.
Developer: No, definitely not. My parents-in-law would much rather sell it themselves then. They would gift it to us only if we intend to use it ourselves. Otherwise, they could really use the money for their retirement.
So, we also moved further away from the city and made some compromises regarding the location. The question is more about the nature of these compromises. If compromises meant living on a busy main road or in the middle of nowhere, with friends too far away or something like that, that would be different from having to shop elsewhere or having a slightly longer commute.
In the first case, I wouldn’t accept those compromises, but in the second case, which applies to us, we did. My wife’s commute is about the same in terms of kilometers, just a different route, and mine is somewhat longer (about 10m (6 miles)). Shopping isn’t possible in our town yet, but it’s planned, and for now, we can shop in neighboring towns or near our workplaces. In return, we have a quieter location (good for children and walking the dog), neighbors we know (which often isn’t the case in more “desirable” areas, where it can be more anonymous), plot sizes where you don’t feel like you’re sharing a terrace with the neighbor (which is common in my area: priority is the city, but the plot is only large enough for a carport and a small terrace), and on top of that, the price per square meter is more than cut in half.
In the first case, I wouldn’t accept those compromises, but in the second case, which applies to us, we did. My wife’s commute is about the same in terms of kilometers, just a different route, and mine is somewhat longer (about 10m (6 miles)). Shopping isn’t possible in our town yet, but it’s planned, and for now, we can shop in neighboring towns or near our workplaces. In return, we have a quieter location (good for children and walking the dog), neighbors we know (which often isn’t the case in more “desirable” areas, where it can be more anonymous), plot sizes where you don’t feel like you’re sharing a terrace with the neighbor (which is common in my area: priority is the city, but the plot is only large enough for a carport and a small terrace), and on top of that, the price per square meter is more than cut in half.
Winniefred schrieb:
It’s not bad there, no. But is “not bad” really the right way to describe the location of your own house? We’re quite uncertain about that. Of course, the advantages are clear. Economically and for the children, the small town would be better. My husband grew up happily there, and without this plot, we would never be able to get such a great and short financing deal elsewhere.I believe the point about the children should carry more weight. Of course, the kids will eventually move out, and you will probably continue living in the house. But the years until then are something your children will likely appreciate for their whole lives. If after some child-free time living in the small town “annoys” you, you can always move away again, sell or rent out the house, and return to the city. That’s something we have factored into our plans as well. We are even considering moving abroad later on...
Winniefred schrieb:
We’re also aware that this might seem like “complaining at a high level.” Others may wonder what our problem is and would be glad to have such an opportunity.No, I don’t think that at all. You are dealing with a perfectly normal question. What others think or how they might feel about it shouldn’t matter, even if such thoughts are natural.
Winniefred schrieb:
For others, it might be a dream location anyway. But for us city people it isn’t. The further out in the countryside, the less we could imagine living there long-term. We love going on countryside vacations, but living permanently in the countryside is out of the question for us.It’s like with everything in life: you have to be willing to make compromises. If you’re not, it’s simply not the right choice.
At the end of the day, you’ll probably have to make a compromise between:
- No house
- House with less favorable financing in the preferred location
- House with favorable financing in the less preferred location
The decision ultimately has to be yours.
I can only say: We consciously chose to build a house in a rural area because my in-laws live there and we are expecting children. The setting is perfect for us. I personally spent a lot of time with my grandparents in the countryside and it did me no harm, I assure you. 😉
In emergencies, you can sell your house and move into an apartment just as a renter can move. As a homeowner, you even receive money from the sale, while renters do not. Renters have an obligation to pay rent for life, whereas homeowners eventually finish paying off their mortgage. Usually, income increases over the years, making the payments comparatively more affordable.
Best regards,
Sabine
Best regards,
Sabine
B
Bieber08158 Dec 2016 15:25Winniefred schrieb:
There is a tram, bus, and suburban train available, as well as all other infrastructure from doctors to schools, etc. However, it is 17 km (11 miles) away from our major city. What are you missing? An opera house? If you are a bit older and need to maintain a house... ;-). Basically, location is very important; I would try not to compromise on it. But it seems to suit you anyway. Would you like to mention any place names?Curly schrieb:
In emergencies, you can sell your house and move into an apartment just as you can move as a tenant. As a homeowner, you even get some money back, whereas as a tenant, you get nothing. That includes the assumption that property values will steadily increase. This is not necessarily the case. Also, all the additional costs we pay today are not recovered when selling and must be paid again when buying a new property. As a tenant, you do not have those costs in the same way.