ᐅ Relation between Construction Cost and Financing – Survey
Created on: 11 Aug 2019 18:30
H
Hauswunsch 23
Hello,
the traditional rule is that the equity share should be at least 30% of the construction cost/purchase price. Also, that the loan installment should not exceed 40% of the income (preferably only the main earner’s salary).
But how many still stick to these ideal criteria nowadays?
I’d be glad if users shared their percentage figures.
Best regards and have a pleasant Sunday evening
the traditional rule is that the equity share should be at least 30% of the construction cost/purchase price. Also, that the loan installment should not exceed 40% of the income (preferably only the main earner’s salary).
But how many still stick to these ideal criteria nowadays?
I’d be glad if users shared their percentage figures.
Best regards and have a pleasant Sunday evening
There are simply too many factors involved to expect any meaningful conclusions.
For example, help, help—someone built their house over 6 to 7 years ago. Back then, a house and land probably cost half as much as they do today. So having 30% or more equity, or only using 20% of your income, is not a problem.
But what good does it do to know that it’s healthy to spend only 35% of your salary if you currently have a net income of just 2,000 euros (about $2,200)? You will never finish. Conversely, if you earn 10,000 euros (about $11,000) net, then spending 20% is a small amount.
Or someone has zero equity but pays 50% of their net income while living in Munich.
For example, help, help—someone built their house over 6 to 7 years ago. Back then, a house and land probably cost half as much as they do today. So having 30% or more equity, or only using 20% of your income, is not a problem.
But what good does it do to know that it’s healthy to spend only 35% of your salary if you currently have a net income of just 2,000 euros (about $2,200)? You will never finish. Conversely, if you earn 10,000 euros (about $11,000) net, then spending 20% is a small amount.
Or someone has zero equity but pays 50% of their net income while living in Munich.
Hauswunsch 23 schrieb:
How does the interesting ratio between low equity but very good interest rate and repayment come about? Didn’t save for a home before? Or bought right after starting work? 7 years in the profession, but lived quite well... Traveling, marriage, 2 children, horse, dog... No inheritance or other sources of money... but of course fairly good income and by no means stretching the budget.
I find the high equity ratios quite remarkable anyway. I don’t know anyone in our area who managed to build all-inclusive under 500,000 (currency) – usually significantly above that – which means 30% equity plus additional costs easily amounts to around 200,000 (currency), or more for more expensive houses... OK, you can save that up, but then our children would no longer be at the optimal age to benefit from the best garden and new development area advantages.
H
Hauswunsch 2311 Aug 2019 19:54The general rules of thumb I mentioned don’t come out of nowhere. However, people often say these are no longer up to date.
So here’s a survey.
The percentage rate for the annuity should be calculated in such a way that the loan is fully repaid.
So here’s a survey.
The percentage rate for the annuity should be calculated in such a way that the loan is fully repaid.
H
Hauswunsch 2311 Aug 2019 20:35tomtom79 schrieb:
There are simply too many factors to expect anything meaningful.
For example: Help, help, he built over 6–7 years ago. Back then, a house and land probably cost half as much as today.
So having 30% or more equity or using only 20% of your income was no problem.
Or what good does it do to know that it’s healthy to use only 35% of your salary if you currently have a net income of only 2000 (USD) ... you will never be finished. Conversely, if you earn 10,000 (USD) net, then 20% is little, and so on.
Or someone has zero equity but pays 50% of their net income and lives in Munich. I understand what you mean, but I’m not expecting the percentage rate. I wanted to ask how much importance is still placed on these numbers. Because for me, they are the foundation of secure financing. So far, all users have either met both benchmark values or compensated a poor value with a very good one. There is advertising everywhere for 100% financing, but who actually does that?!