ᐅ Is Buying a House a Wise Decision in the Current Market Situation?
Created on: 23 Sep 2020 14:32
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Alibert87
Good day and hello everyone,
Some time ago, I joined this forum to gather information and read experience reports.
I would like to get your neutral opinion on whether buying property at this time would be advisable. We currently rent in a "very good location" and would like to purchase a home here. Many properties are sold "off-market" or only available at very high prices (I’m talking well over 500,000). There is no land available for development; if there is, a property is demolished and rebuilt. I want to gather some input on whether this whole situation is crazy or if such a project is feasible.
Since we don’t have a specific property in view yet but have been monitoring the market for about 1.5 years and have already done quite a few viewings, I assume the median price for homes or condominiums that suit us would be around 600,000.
He, 33 years old, permanently employed in the public sector, net income 2,600 euros (plus 14 monthly payments plus bonus, around 5,000) – from 2021 about 3,000 net (fixed)
She, 32 years old, permanently employed part-time, 25 hours per week, net income 2,300 (plus additional payments around 2,000)
1 child (child benefit) – possibly a second child within the next 3–5 years
Married, tax class 4
Equity around 110,000 (plus 30,000 as a buffer)
Regarding equity, I have a question: Are bank conditions tiered, so that having, for example, 10,000 more in equity results in a better loan offer (how does this tiering work)?
We are really torn whether or not to take this step. It feels very surreal to spend so much money on housing.
I am grateful for any advice
Regards
Some time ago, I joined this forum to gather information and read experience reports.
I would like to get your neutral opinion on whether buying property at this time would be advisable. We currently rent in a "very good location" and would like to purchase a home here. Many properties are sold "off-market" or only available at very high prices (I’m talking well over 500,000). There is no land available for development; if there is, a property is demolished and rebuilt. I want to gather some input on whether this whole situation is crazy or if such a project is feasible.
Since we don’t have a specific property in view yet but have been monitoring the market for about 1.5 years and have already done quite a few viewings, I assume the median price for homes or condominiums that suit us would be around 600,000.
He, 33 years old, permanently employed in the public sector, net income 2,600 euros (plus 14 monthly payments plus bonus, around 5,000) – from 2021 about 3,000 net (fixed)
She, 32 years old, permanently employed part-time, 25 hours per week, net income 2,300 (plus additional payments around 2,000)
1 child (child benefit) – possibly a second child within the next 3–5 years
Married, tax class 4
Equity around 110,000 (plus 30,000 as a buffer)
Regarding equity, I have a question: Are bank conditions tiered, so that having, for example, 10,000 more in equity results in a better loan offer (how does this tiering work)?
We are really torn whether or not to take this step. It feels very surreal to spend so much money on housing.
I am grateful for any advice
Regards
A
Alibert8724 Sep 2020 14:40Repayment modification options, thanks for the tip!
There would still be additional costs involved...
There would still be additional costs involved...
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Alibert8724 Sep 2020 14:46Nida35a schrieb:
Timing is the issue,
many have already paid the same rent amount in Deutsche Marks 20 years ago,
a doubling of today’s rent over 20 years is not unrealistic.
The installment remains constant; the difference in assets at the end of the term equals one house, with appreciation worth two houses. Yes, that can be correct, but I pay tens of thousands of euros for the bank loan, and honestly, I don’t see any increase in value. Prices for "normal" houses can’t keep going higher.
A few weeks ago, we looked at a terraced house: not in our preferred location, but okay. Living space 125cm (1350 square feet), plot size 155cm (1670 square feet), built in 1970, 400,000 euros (plus additional costs plus at least 100,000 euros for renovations). Sorry, but that’s crazy!
And the worst part is, it’s being sold.
You pay little interest on the loan; moving from 6-8% to today’s rates, it hardly gets any lower. But if you can’t sleep peacefully, then don’t do it.
Even in panel-built apartments, high earners live because they want to, and your rental apartment is fine and can only become more expensive, right?
But the increase in property values is simply a fact.
Even in panel-built apartments, high earners live because they want to, and your rental apartment is fine and can only become more expensive, right?
But the increase in property values is simply a fact.
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Alibert8724 Sep 2020 15:22Nida35a schrieb:
You pay little interest on the loan; going from 6–8% to today’s rates, it can hardly get any lower. But if you can’t sleep peacefully, then don’t do it.
Even in prefabricated buildings, high earners live there because they want to, and your rental apartment is fine and can only become more expensive, right?
But the increase in property values is simply a fact. What do you mean by "going from 6–8% to today’s rates"?
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nordanney24 Sep 2020 15:31Alibert87 schrieb:
Yes, that can be correct, but I pay tens of thousands of euros for the bank loan... and even more than the interest, you pay rent to the landlord. Money is practically given for free. Rental housing is not. It is also a fact that homeowners are in a better position in old age than renters (although renters have - necessary? - flexibility that comes at a high cost). Even if there is no increase in value, it does not matter. Because in the worst case, as a retiree, you live in a property that is no longer worth anything, whereas, for example, friends still pay high rent. As a homeowner, you can only benefit.