Hello and greetings to everyone!
As a "newcomer" here in the forum (my first step out of anonymous reading, so to speak...), I am curious about your opinions and especially looking forward to your advice.
My partner and I (both 33 years old) currently have the opportunity to purchase a truly (for us) beautiful plot of land. The plot is located in Lower Saxony, Germany (more rural area). My partner is a civil servant and I am an employee.
About the plot:
approximately 1,013 sqm (11,000 sq ft), new development area, around EUR 190,000 plus additional costs.
Obligation to build by mid-2026.
Our financial framework is as follows (net income):
Me: EUR 6,800 per month
Partner: EUR 2,700 per month.
Current equity of EUR 100,000 (mostly in stocks), no debts.
Due to the current situation with high construction costs and high interest rates, we do not want to build right now. Instead, we plan to start construction in the second half of 2025.
After weighing all the (to my knowledge) advantages and disadvantages of financing the land and the house separately, I have currently requested financing for the land and received the following offer:
Net loan of EUR 170,000 at 3.78% nominal interest p.a., fixed for 10 years, with 4% repayment (equity use about EUR 33,000). At the same time, I negotiated with the bank that in 2025 they will subordinate up to an amount X (=> house financing) so that I should have maximum flexibility in choosing the financing partner at that time (if I’m not overlooking anything).
Despite this, which I consider a really good offer, two points are troubling us currently. On the one hand, of course, we are very annoyed that we are apparently 2 years too late for this (that’s the emotional aspect), and on the other hand, we have significant concerns about the overall financing of house and land. I actually see no reason why we should have to pay more than a maximum (!!) of EUR 3,000 per month for repaying the house loan later – I would prefer to keep this amount between EUR 2,500 and EUR 2,800 (wishes...).
Now, of course, I also put some figures into Excel with the following parameters:
Equity in 2025: EUR 120,000 (EUR 65,000 remaining now plus saving rate of EUR 2,500 per month)
Interest rate: 4% p.a. (pure guesswork)
Initial repayment: 2%
My result:
After deducting all these positions, we can actually afford a house for only EUR 355,000? Am I missing something here? Am I making a mistake or is the situation really as unusual as it seems?
Do you maybe have some ideas or tips regarding your approach? We are currently extremely uncertain...
Thanks in advance and have a great start to the weekend!
Basti
As a "newcomer" here in the forum (my first step out of anonymous reading, so to speak...), I am curious about your opinions and especially looking forward to your advice.
My partner and I (both 33 years old) currently have the opportunity to purchase a truly (for us) beautiful plot of land. The plot is located in Lower Saxony, Germany (more rural area). My partner is a civil servant and I am an employee.
About the plot:
approximately 1,013 sqm (11,000 sq ft), new development area, around EUR 190,000 plus additional costs.
Obligation to build by mid-2026.
Our financial framework is as follows (net income):
Me: EUR 6,800 per month
Partner: EUR 2,700 per month.
Current equity of EUR 100,000 (mostly in stocks), no debts.
Due to the current situation with high construction costs and high interest rates, we do not want to build right now. Instead, we plan to start construction in the second half of 2025.
After weighing all the (to my knowledge) advantages and disadvantages of financing the land and the house separately, I have currently requested financing for the land and received the following offer:
Net loan of EUR 170,000 at 3.78% nominal interest p.a., fixed for 10 years, with 4% repayment (equity use about EUR 33,000). At the same time, I negotiated with the bank that in 2025 they will subordinate up to an amount X (=> house financing) so that I should have maximum flexibility in choosing the financing partner at that time (if I’m not overlooking anything).
Despite this, which I consider a really good offer, two points are troubling us currently. On the one hand, of course, we are very annoyed that we are apparently 2 years too late for this (that’s the emotional aspect), and on the other hand, we have significant concerns about the overall financing of house and land. I actually see no reason why we should have to pay more than a maximum (!!) of EUR 3,000 per month for repaying the house loan later – I would prefer to keep this amount between EUR 2,500 and EUR 2,800 (wishes...).
Now, of course, I also put some figures into Excel with the following parameters:
Equity in 2025: EUR 120,000 (EUR 65,000 remaining now plus saving rate of EUR 2,500 per month)
Interest rate: 4% p.a. (pure guesswork)
Initial repayment: 2%
My result:
| EUR 460,000 | Possible total financing (equity plus debt) |
| EUR 10,000 | Buffer |
| EUR 40,000 | Additional costs |
| EUR 20,000 | Kitchen |
| EUR 390,000 | Subtotal |
| EUR 35,000 | Outdoor facilities |
| EUR 355,000 | Construction costs |
After deducting all these positions, we can actually afford a house for only EUR 355,000? Am I missing something here? Am I making a mistake or is the situation really as unusual as it seems?
Do you maybe have some ideas or tips regarding your approach? We are currently extremely uncertain...
Thanks in advance and have a great start to the weekend!
Basti
X
xMisterDx20 Jan 2023 22:33This can only be satire... a net income of 9,500 euros per month, no children, and wondering if a 500,000-euro loan can be financed?
If you set aside 5,000 euros per month, that's roughly what we currently have left to "get by on" with two children.
And even then, there is still something left over.
If you set aside 5,000 euros per month, that's roughly what we currently have left to "get by on" with two children.
And even then, there is still something left over.
W
WilderSueden20 Jan 2023 22:36Keep in mind that it takes some time before construction actually begins. You don’t just decide on the floor plan, the building company, and the financing overnight, and it’s advisable to approach this process with enough calm and patience. Therefore, I would recommend starting now so that everything is ready to sign by summer.
However, with a budget of 355,000 (for currency, see original), it will be difficult to get a house unless you contribute a significant amount of your own labor. Given your income, though, much more should be possible. In my opinion, your very first appointment should be with the bank to clarify your financing options. Then, do a critical assessment of what you want, what you can do without, and what can possibly be done at a later stage.
However, with a budget of 355,000 (for currency, see original), it will be difficult to get a house unless you contribute a significant amount of your own labor. Given your income, though, much more should be possible. In my opinion, your very first appointment should be with the bank to clarify your financing options. Then, do a critical assessment of what you want, what you can do without, and what can possibly be done at a later stage.
X
xMisterDx20 Jan 2023 22:42WilderSueden schrieb:
For $355,000 you'll have a hard time getting a house unless you put in a lot of your own work. With a well-known major general contractor, you can get a 152m² (1,636 sq ft) turnkey house without additional construction-related costs for 320,000 EUR. Price for the Hannover region.
So, it’s possible.
S
Sunshine38721 Jan 2023 10:16In Lower Saxony, based on my own experience, it is naturally cheaper than in Bavaria. However, the price still seems very low to me. Does that already include electric roller shutters, underfloor heating, and painting/flooring? You can easily add those costs to the 320k, and in the end, you will probably end up at around 3k per m2 (≈ 280 sq ft), including additional building costs.
H
Hausbau55EE21 Jan 2023 14:10xMisterDx schrieb:
With a well-known large general contractor, you can get a 152m² (1,636 sq ft) house turnkey without additional construction costs for 320,000 EUR. Price for the Hannover region.
So, that’s possible. Anyone currently paying a monthly rent including utilities of 2,500 EUR will probably find it difficult to commit to a house with construction costs of 2,100 EUR/m² (195 USD/sq ft). I see bigger expectations in terms of space and features. Who lowers their standards without good reason?
K
karl.jonas21 Jan 2023 15:20baristabasti schrieb:
up to an amount X (=> home financing)If I understand this correctly, I would advise caution here. You shouldn’t commit to a lender now for a loan in two or three years, as that could become very costly. On the other hand, it has already been mentioned that you can repay the loan quickly—if you want to.