Hello community,
I have already read through many threads, and thanks to Bauexperte and others, I now have a realistic idea of what our house would cost.
We are currently a family of four. My wife (27) will start a well-paid part-time job this fall, and I (38) will become a civil servant in July. In short, from October on, we will have about 3000 euros of disposable income after all expenses. We currently rent at a reasonable price thanks to a federal housing program, and we also live in an idyllic setting in one of the nicest districts of Cologne, next to a park, in a quiet residential area. The 3 rooms are enough for the two of us and our two small daughters, but we still wish to have 2-3 more children in the next 10 years.
As equity, excluding our emergency reserve of 25,000 euros, we have the sale proceeds of about 150,000 euros from my parents’ terraced house, which is still rented out. The plot of land (305m2 (3283 sq ft)) would cost 100,000 euros if we were awarded the purchase.
For the house, we had in mind a semi-detached house with a full basement, geothermal heat pump, a converted attic, and a garage. The house size would be 7x12m (23x39 feet), which means about 170m2 (1830 sq ft) of living space.
After a conservative estimate, including Bauexperte’s experience, I came to 370,000 euros for the house including all additional construction costs, garage, garden, etc., with a 10,000 euro buffer.
That would mean we would need a loan of around 320,000 euros.
Originally, before I found this forum, I had looked at prices for single-family and semi-detached houses from manufacturers, and rough estimates were mostly around 250,000 euros. But I did not realize there would be so many additional expenses. I was mentally prepared for a loan of 200,000 euros, but the extra 120,000 euros seem quite hefty for us to manage. I had no idea that building a house would be this expensive. The problem is that right now we would be building somewhat beyond our current needs, but considering more children on the way, we would need that space reserved. I don’t know if it makes sense to limit ourselves to 120m2 (1290 sq ft) and then, with 2-3 additional children in 10 years, find out our house is too small… to then sell and build new?
On the other hand, a loan of 320,000 euros feels astronomical. At a 3-4% repayment rate, it would take about 18-20 years to be debt-free. During that time, we would have a maximum of 2000 euros left for living after all obligations are paid.
So my general consideration and request for your feedback is this: we are currently thinking about giving up the house-building project and continuing to rent. If the need arises with child number 3 or 4, we would have to move out anyway. Possibly, buying the apartment in the coming years at special conditions could be an option, and later selling it for a profit on the open market (from when do you not have to pay taxes on that?). That would increase our equity, but I think this would be a question of about 10 years.
On the other hand, building and living in a larger home would mean using the space with the children now, instead of waiting 10 years to buy or build when more equity is available. And when do children really need a house? I believe especially when they are small, right?
What are your thoughts on our situation? What would you advise?
So far, we have lived without any debt – what is it like to have a high monthly repayment? Is there still money left for vacations, investments, or does the house become the all-dominant center of life for the next 10-15 years?
Thank you for your opinions!
Best regards
sw1008
I have already read through many threads, and thanks to Bauexperte and others, I now have a realistic idea of what our house would cost.
We are currently a family of four. My wife (27) will start a well-paid part-time job this fall, and I (38) will become a civil servant in July. In short, from October on, we will have about 3000 euros of disposable income after all expenses. We currently rent at a reasonable price thanks to a federal housing program, and we also live in an idyllic setting in one of the nicest districts of Cologne, next to a park, in a quiet residential area. The 3 rooms are enough for the two of us and our two small daughters, but we still wish to have 2-3 more children in the next 10 years.
As equity, excluding our emergency reserve of 25,000 euros, we have the sale proceeds of about 150,000 euros from my parents’ terraced house, which is still rented out. The plot of land (305m2 (3283 sq ft)) would cost 100,000 euros if we were awarded the purchase.
For the house, we had in mind a semi-detached house with a full basement, geothermal heat pump, a converted attic, and a garage. The house size would be 7x12m (23x39 feet), which means about 170m2 (1830 sq ft) of living space.
After a conservative estimate, including Bauexperte’s experience, I came to 370,000 euros for the house including all additional construction costs, garage, garden, etc., with a 10,000 euro buffer.
That would mean we would need a loan of around 320,000 euros.
Originally, before I found this forum, I had looked at prices for single-family and semi-detached houses from manufacturers, and rough estimates were mostly around 250,000 euros. But I did not realize there would be so many additional expenses. I was mentally prepared for a loan of 200,000 euros, but the extra 120,000 euros seem quite hefty for us to manage. I had no idea that building a house would be this expensive. The problem is that right now we would be building somewhat beyond our current needs, but considering more children on the way, we would need that space reserved. I don’t know if it makes sense to limit ourselves to 120m2 (1290 sq ft) and then, with 2-3 additional children in 10 years, find out our house is too small… to then sell and build new?
On the other hand, a loan of 320,000 euros feels astronomical. At a 3-4% repayment rate, it would take about 18-20 years to be debt-free. During that time, we would have a maximum of 2000 euros left for living after all obligations are paid.
So my general consideration and request for your feedback is this: we are currently thinking about giving up the house-building project and continuing to rent. If the need arises with child number 3 or 4, we would have to move out anyway. Possibly, buying the apartment in the coming years at special conditions could be an option, and later selling it for a profit on the open market (from when do you not have to pay taxes on that?). That would increase our equity, but I think this would be a question of about 10 years.
On the other hand, building and living in a larger home would mean using the space with the children now, instead of waiting 10 years to buy or build when more equity is available. And when do children really need a house? I believe especially when they are small, right?
What are your thoughts on our situation? What would you advise?
So far, we have lived without any debt – what is it like to have a high monthly repayment? Is there still money left for vacations, investments, or does the house become the all-dominant center of life for the next 10-15 years?
Thank you for your opinions!
Best regards
sw1008
Hello,
You should include KfW funding in your financing, but ideally choose only one KfW loan. If you build energetically efficient according to KfW standards, you can use this program. Basically, you could also take out a low-interest loan for home ownership, each up to 50,000 euros (€). These can be combined.
The downside of these loans is that they only have a guaranteed fixed interest period of up to 10 years. If you haven’t fully repaid the loan at the end of these 10 years, you might need to refinance, and then the interest rate could be at normal bank levels. So, the interest rate risk is relatively high.
With current interest rates, it definitely makes sense to choose a long fixed interest period (20 to 30 years) with options for extra repayments and the possibility to adjust the repayment rate several times. The interest rate is then guaranteed for the entire duration.
Of course, with a shorter fixed interest period, you pay less interest upfront, but with an interest rate of 3.6%, you are better off over the term than with a 2.7% rate and then having to start worrying about renegotiating a new loan after 10 years.
We consulted with our local bank, an online bank, and an “independent” financial advisor who turned out to be completely incompetent. We submitted one inquiry and a self-disclosure, and at the very first appointment, the advisor had the complete paperwork ready for signing.
The online bank did not offer loans with a fixed interest period longer than 15 years.
We spent countless appointments with our local bank to optimize the financing. We really liked that!
I think it is also partly a matter of gut feeling. You should get an offer that fits your needs well.
You should include KfW funding in your financing, but ideally choose only one KfW loan. If you build energetically efficient according to KfW standards, you can use this program. Basically, you could also take out a low-interest loan for home ownership, each up to 50,000 euros (€). These can be combined.
The downside of these loans is that they only have a guaranteed fixed interest period of up to 10 years. If you haven’t fully repaid the loan at the end of these 10 years, you might need to refinance, and then the interest rate could be at normal bank levels. So, the interest rate risk is relatively high.
With current interest rates, it definitely makes sense to choose a long fixed interest period (20 to 30 years) with options for extra repayments and the possibility to adjust the repayment rate several times. The interest rate is then guaranteed for the entire duration.
Of course, with a shorter fixed interest period, you pay less interest upfront, but with an interest rate of 3.6%, you are better off over the term than with a 2.7% rate and then having to start worrying about renegotiating a new loan after 10 years.
We consulted with our local bank, an online bank, and an “independent” financial advisor who turned out to be completely incompetent. We submitted one inquiry and a self-disclosure, and at the very first appointment, the advisor had the complete paperwork ready for signing.
The online bank did not offer loans with a fixed interest period longer than 15 years.
We spent countless appointments with our local bank to optimize the financing. We really liked that!
I think it is also partly a matter of gut feeling. You should get an offer that fits your needs well.
So, I was offline for two days and just stressed out at work, but now I have caught up on the reading.
In this case, it doesn’t seem disadvantageous since there is apparently an inherited residential property available, which could possibly be sold (for example, to repay the KfW loans). Rental property also counts when applying for loans, making you creditworthy through rental income. This is really a case-by-case situation.
Our situation is similar (if you don’t count the kids 😉): We are already in the middle of our lives and according to a “normal” calculation should have the loan repaid by our mid-60s or structure the loan term so that everything is fully paid off by then. But that would mean for my husband finishing in 10 years. With a net income of 4000 total, that could be managed (total loan amount about 200,000), but I don’t want that. I want it relaxed because who knows what else life might bring 😉
So, we have a very relaxed 10-year loan that can partly be paid off with additional pension benefits starting at my husband’s retirement (and of course we also pay it down during the term). I, as the sole earner, can manage the rest, and the state pension will be lived on 😀
So, if you can unlock a source of funds in about 10 years, a loan with a 10-year term isn’t bad at all... at least you can benefit from low interest rates.
Warning about KfW property: I regret it! Interest on standby capital has to be paid after about 4 months, and the interest savings are hardly worth it!
Jaydee schrieb:
The downside of these loans is that they only guarantee a fixed interest rate period of up to 10 years. If you haven’t fully paid off the loan by the end of those 10 years, you might need a follow-up financing, and then the interest rate can revert to standard bank rates. So, the interest rate risk is relatively high.
In this case, it doesn’t seem disadvantageous since there is apparently an inherited residential property available, which could possibly be sold (for example, to repay the KfW loans). Rental property also counts when applying for loans, making you creditworthy through rental income. This is really a case-by-case situation.
Our situation is similar (if you don’t count the kids 😉): We are already in the middle of our lives and according to a “normal” calculation should have the loan repaid by our mid-60s or structure the loan term so that everything is fully paid off by then. But that would mean for my husband finishing in 10 years. With a net income of 4000 total, that could be managed (total loan amount about 200,000), but I don’t want that. I want it relaxed because who knows what else life might bring 😉
So, we have a very relaxed 10-year loan that can partly be paid off with additional pension benefits starting at my husband’s retirement (and of course we also pay it down during the term). I, as the sole earner, can manage the rest, and the state pension will be lived on 😀
So, if you can unlock a source of funds in about 10 years, a loan with a 10-year term isn’t bad at all... at least you can benefit from low interest rates.
Warning about KfW property: I regret it! Interest on standby capital has to be paid after about 4 months, and the interest savings are hardly worth it!
The house will be inherited when my parents pass away, which of course nobody can predict, but then it will be available for buyout at one-third of the sale price.
Today, I searched for used properties again... it’s incredible what prices people are asking. You can’t find anything decent under 380,000 for a size of about 160 square meters (1,722 square feet) that isn’t older than 20 years, or the location is terrible...
This motivates me again to build my own house...
Today, I searched for used properties again... it’s incredible what prices people are asking. You can’t find anything decent under 380,000 for a size of about 160 square meters (1,722 square feet) that isn’t older than 20 years, or the location is terrible...
This motivates me again to build my own house...
sw1008 schrieb:
The house will be inherited when my parents pass away, which, as everyone knows, is unpredictable. However, it will then be available for buyout at one-third of the sale price.
In that case, I withdraw my previous comment. You simply cannot plan financially based on speculative death or inheritance!