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
nordanney schrieb:
As a homeowner, you can only benefit.I find that a bit optimistic, but I do understand the basic intention behind your point.
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NoggerLoger24 Sep 2020 16:21Why not go for a cheaper condominium? It’s a good starting point. You can rest easy and have property ownership.
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Hausbautraum2024 Sep 2020 18:46Alibert87 schrieb:
Did you still have a period with financial cutbacks? Like parental allowance or part-time work? Because living on $1800 (1,800 euros) permanently sounds challenging from my current perspective. So our plan regarding children is:
- 1 year of parental allowance: definitely no problem for us.
- For the period between the end of parental allowance and the start of daycare, we will save a reserve beforehand. We can skip vacations occasionally and can also do without most things for a while.
And unlike some others here, neither of us would hesitate to ask our parents for help if necessary. Although I don’t think that will be needed.
But considering the total amount relative to our income, the decision is definitely not easy.
However, we have many friends and acquaintances who have taken out loans of $500k (500,000 euros) with similar incomes. Unfortunately, in the Munich area, you can’t get a house like yours for $400k (400,000 euros) plus $100k (100,000 euros) renovation and additional costs like taxes and fees.
For example, a friend recently looked at a place:
120 m² (1,292 sq ft) living space, 420 m² (4,521 sq ft) lot, built in 1955 for $785k (785,000 euros) plus additional costs. It’s 30 km (18 miles) west of Munich, so not central city location.
There’s definitely still room to grow in your area.
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Alibert8725 Sep 2020 09:46NoggerLoger schrieb:
Why not a cheaper condominium? It’s a good start. You can rest easy and own property.Yes, as I said, I would take that too. But a condominium with a garden is hardly any cheaper.
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Alibert8725 Sep 2020 09:52Hausbautraum20 schrieb:
So, our plan regarding children is as follows:
- 1 year of parental allowance: definitely not an issue for us.
- For the period between the end of parental allowance and the start of daycare, we will save a reserve in advance. We’re willing to skip vacations and cut back on most non-essential expenses.
Also, unlike some others here, we both have no hesitation about asking our parents for help in an emergency. Although, I don’t think that will be necessary.
But considering the total amount compared to our income, the decision is definitely not easy.
We have many friends/acquaintances who have taken out 500k loans with comparable incomes. Unfortunately, in the Munich area, you don’t get a house like yours for 400k + 100k renovation + additional costs.
For example, a friend recently looked at a property:
120 sqm (1290 sq ft) living space, 420 sqm (4521 sq ft) lot, built in 1955, for 785k plus extra costs. Located 30 km (19 miles) west of Munich, so not in the city center.
So, it seems there’s still room for improvement with your place. Unfortunately, we can’t consistently rely on anyone for childcare. My wife will likely stay home for about 1.5 years when our second child arrives (but both are assumptions).
So, you’re saying that with a monthly payment of around 1500 euros it won’t work?! We have initially scheduled an appointment with Interhyp to discuss everything roughly and to get some figures.
Are consultations with Dr. Klein and Interhyp always free of charge?