ᐅ Is Buying a House a Wise Decision in the Current Market Situation?
Created on: 23 Sep 2020 14:32
A
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
H
Hausbau20222 Dec 2020 10:29Costs simply require money, and no one has anything to give away for free. You can certainly wait, but don’t be surprised if it ends up being even more expensive in the end and you think, “I wish I had acted earlier.”
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Alibert8729 Dec 2020 11:10Alibert87 schrieb:
There is now a possibility that we could buy a property in our preferred location. A whole plot. Regarding that:
Unfortunately, it’s only a mid-terrace house that would need to be renovated according to our wishes (it has been lived in by an elderly lady for the last few years) and costs around 400,000 EUR.
What is still negative for us: no direct access to the garden, no garage attached to the house, no parking space.
(I don’t have more details yet as this is still quite recent.)
A mid-terrace house was never an option for us before because of the narrowness and poor lighting; now we have looked at some “modern” mid-terrace houses with floor-to-ceiling windows, very good layouts, etc., and this offer has made us think.
In my opinion, the price/performance ratio of such “small” properties doesn’t add up. Or maybe we simply lack the imagination when it comes to mid-terrace houses...
Thanks for your opinions 🙂I would like to give a brief update on the house and ask for your assessment:
The house was built in 1962, has about 160 square meters (1,722 square feet) spread over three floors, the plot is around 380 square meters (4,090 square feet), fully basemented, and needs renovation (heating, plumbing, windows, possibly insulation; it is an architect-designed house—don’t know if that’s a positive, as the materials used are supposed to be of higher quality).
Can you give a rough estimate of the costs we should expect for this renovation? And in this case, would it be worth applying for a KfW loan?
Our estimate is around 100,000 to 150,000 EUR.
Many thanks!!
N
nordanney29 Dec 2020 11:21Alibert87 schrieb:
The house was built in 1962, has about 160 sqm (1,722 sq ft) over three floors, with a plot of around 380 sqm (4,090 sq ft), fully basemented. It needs renovation (heating, plumbing, windows, possibly insulation). It is an architect-designed house (not sure if that's a plus, as the materials used are supposed to be of higher quality).
Can you roughly estimate what costs to expect for this renovation? And is a KfW loan worth it in this case?
Our estimate is around 100,000 to 150,000 euros... I am currently renovating a two-family house with 120 sqm (1,292 sq ft) and 80 sqm (861 sq ft) apartments. The 120 sqm (1,292 sq ft) unit is being fully renovated, including plumbing and electrical installations, doors and windows, floors, bathrooms, new heating system plus underfloor heating, etc. The 80 sqm (861 sq ft) unit is getting new radiators, its own heat pump, and new windows. In addition, all necessary insulation is being added (top-floor ceiling, basement ceiling, external wall insulation). Everything is being done to KfW 55 standard, which means a 40% subsidy on most of the measures, including support for the energy consultant (I am paying from equity and receiving the grant).
No changes to the internal layout (only one wall was removed).
I expect the total cost to be around 100,000 euros. The subsidy will then be deducted from this amount.
However, all work is awarded as individual contracts and includes own labor contributions (drywall installation, some gutting, tiling/wood flooring/insulation work). Without own labor, I would estimate an additional 30,000 euros or possibly more.
So your estimate seems roughly accurate.
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Alibert8729 Dec 2020 11:34nordanney schrieb:
I am currently renovating a two-family house with 120sqm (1300 sq ft) / 80sqm (860 sq ft). The 120sqm (1300 sq ft) unit is being updated from plumbing and electrical wiring to doors and windows, floors, bathrooms, a new heating system plus underfloor heating, and so on. The 80sqm (860 sq ft) unit will get new radiators, its own heat pump, and new windows. Additionally, all necessary insulation will be added (attic ceiling, basement ceiling, external wall insulation). Everything will meet the KfW 55 standard; this means a 40% subsidy on most measures, including funding for the energy consultant (I am paying from equity and will take the subsidy).
No changes to the layout (only one wall was removed).
I expect to end up around €100,000 (about $110,000). The subsidy will be deducted from this.
But: All contracts are awarded individually, and I am including own labor (drywall work, some gutting, tiling/parquet/insulation work). Without own labor, I would estimate an extra €30,000 (about $33,000), possibly a bit more.
So your rough estimate should be quite accurate. Thanks for sharing your details. Your costs are very reasonable, probably due to the individual contracts.
Do you think it makes sense to use the KfW loan for this? I have read some criticism about KfW: it takes a long time to get approval, energy consultants can have unrealistic expectations, and the loan conditions are not as attractive compared to regular loans anymore (due to the requirements).
Do you know which KfW loan I can generally use? Is it possible to combine them?
N
nordanney29 Dec 2020 11:47Alibert87 schrieb:
Is it worth using the KfW loan for that, for example? It depends. Variables you might not know yet include what exactly you need or want to finance, the terms offered by a bank loan, and which KfW efficiency level you want to achieve.
The Energy Efficient Refurbishment program is relevant for renovations:
Alibert87 schrieb:
(It takes a long time to get approval, the energy consultant’s ideas are unrealistic, and compared to a conventional loan the terms aren’t as attractive anymore given the requirements?) All of that is relative. For the grant, I needed only a few days—although reimbursement happens only at the end. An interest rate of 0.75% for 10 years isn’t bad, but it’s limited to "only" 10 years.
The energy consultant cost €3,520 (I handled construction supervision only online; I don’t need on-site support), and KfW reimburses 50% of that. The application process was straightforward and quick.
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Alibert8729 Dec 2020 11:59nordanney schrieb:
It depends. Variables you may not know yet include what you need or want to finance, the terms of a bank loan, and which KfW efficiency level you aim to achieve.
The Energy Efficient Renovation program is applicable for renovations:
It's all relative. I only needed a few days for the grant application – however, reimbursement is only done at the end. An interest rate of 0.75% for 10 years isn’t bad, but that is “only” 10 years.
The energy consultant cost me €3,520 (construction supervision was online only, I didn’t need onsite support) – 50% of that is reimbursed via KfW. The application process was straightforward and quick. I had never looked into the KfW topic in such detail before, thanks!
Praix:
So, I take out a KfW loan of €120,000 (KfW 85) for 10 years, then pay €1,200 monthly, and receive the €36,000?
What does the KfW bank cover exactly—the material costs that I submit as invoices? What if I do the roof insulation myself?
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