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
W
WilderSueden21 Jan 2023 17:46Hausbau55EE schrieb:
Anyone currently paying a total rent of 2500 EUR/month (about $2700 USD) for an apartment will probably find it hard to commit to a house with construction costs of 2100 EUR/m² (about $195 per sq ft). I see people expecting larger floor areas and better features. Who lowers their standards without a good reason? Apart from the fact that with Town & Country, "turnkey" does not mean move-in ready. Floors and painting are still missing. Also, low-cost providers often include fewer construction services, so it wouldn’t be realistic to expect the same flat rate for additional construction costs (such as building permits / planning permissions).
And yes, given that income and current rent, you rarely see a house built to the absolute minimum standard.
S
Sunshine38721 Jan 2023 18:05However, to be fair, you should also take a look at the current standard features offered by Town & Country, which are all included. I was quite surprised myself just now. For example, they offer the Flair 125 model for €260,000 (about $280,000), which is roughly €2,100 per square meter (about $195 per square foot), including underfloor heating, an air-to-water heat pump, photovoltaics preparation, roller shutters, fresh air automatic ventilation, and more. I didn’t remember it being so comprehensive before, and it definitely wasn’t. This shows that companies are competing for customers again. It’s a good sign. It also means that providers can no longer charge whatever they want for low-spec builds.
B
baristabasti21 Jan 2023 19:44karl.jonas schrieb:
If I understand correctly, I would advise caution here. You shouldn’t commit to a lender now for two or three years, as that could become very expensive. On the other hand, it has already been mentioned that you could repay the loan quickly, if you want to.Hi. Exactly to avoid this risk, I negotiated a subordination agreement with the bank financing the plot for 2025/26. This way, we will be free to choose another bank at better terms, and that bank will get the first charge.
I will also calculate the scenario you and others suggested about repaying the plot faster, possibly with more equity. So far, I have ruled out full financing now for a build in 2025 (hoping for “better times”), although some builders are now offering price adjustment guarantees (downward). I will consider that again. Thanks to everyone.
W
WilderSueden21 Jan 2023 21:09Sunshine387 schrieb:
To be fair, you should also take a look at the current offerings from Town & Country, which include everything. I was surprised myself. For example, they offer the Flair 125 for €260,000 (about $300,000) – that’s around €2,100 per square meter (about $195 per square foot) – including underfloor heating, an air-to-water heat pump, photovoltaic pre-installation, roller shutters, fresh air automatic ventilation, and more. I didn’t remember it being this comprehensive before, and it definitely wasn’t. It shows that they are competing for customers again. A good sign. And that providers can no longer charge whatever they want for low-spec models. The Lunos ventilation systems have been around for over two years now. But yes, they have included some new features. It was probably quite discouraging to offer gas heating with radiators as standard, especially when gas prices exceed 20 cents per kWh.
However, you need to be careful not to equate things that aren’t the same. The Daikin heat pumps tend to be at the lower end in terms of reputation and probably actual durability as well.
S
Sunshine38721 Jan 2023 21:17Of course, a Dacia is not as high quality as a BMW, but what is better: driving a car or walking? I believe the first option. Even a Town & Country house can last a long time without major repairs. Alternatively, you can choose Viebrockhaus if you value the warranty, but then you pay about 50% more. That can cover a lot of repairs. Although general statements about how long something will last are always difficult. I know cases where the expensive gas boiler broke down after 10 years, while the cheaper one lasted 20 years. Sometimes it's just luck or bad luck. Affordable doesn’t always mean poor quality. For example, Team Massivhaus has an excellent reputation here in the north and they build cost-effectively; they are truly worth their price.
X
xMisterDx22 Jan 2023 14:56It’s always the same old argument in the end. Dacia instead of BMW, blah blah.
The trick with Town & Country is simply buying everything in large quantities centrally. A small contractor who buys 50 boilers from Vaillant per year gets very different prices than Town & Country, which buys 5,000 heating systems annually.
I also see this from the fact that I already have my gas heating installed, while homeowners working with smaller companies are still waiting for theirs, even though they ordered before me 😉
The proper comparison would therefore be mass-produced car versus custom-made.
After all, a BMW is basically the same except for a few options and colors.
But if someone’s already overwhelmed with a budget of 350,000 EUR (about 350,000 USD) and a net income of 9,500 EUR (about 9,500 USD), maybe they should reconsider building altogether?
PS:
The best example is screws. If you buy an M12 screw at a hardware store, you quickly pay around 1 EUR (about 1 USD) each.
Our machine manufacturer buys them in bulk for 10 cents (about 10 cents) each.
Any questions?
The trick with Town & Country is simply buying everything in large quantities centrally. A small contractor who buys 50 boilers from Vaillant per year gets very different prices than Town & Country, which buys 5,000 heating systems annually.
I also see this from the fact that I already have my gas heating installed, while homeowners working with smaller companies are still waiting for theirs, even though they ordered before me 😉
The proper comparison would therefore be mass-produced car versus custom-made.
After all, a BMW is basically the same except for a few options and colors.
But if someone’s already overwhelmed with a budget of 350,000 EUR (about 350,000 USD) and a net income of 9,500 EUR (about 9,500 USD), maybe they should reconsider building altogether?
PS:
The best example is screws. If you buy an M12 screw at a hardware store, you quickly pay around 1 EUR (about 1 USD) each.
Our machine manufacturer buys them in bulk for 10 cents (about 10 cents) each.
Any questions?
Similar topics