ᐅ Affordable Homeownership: Buying an Existing House or a Prefabricated Home?
Created on: 30 Dec 2018 11:07
S
Soraya
Hello everyone,
we are not proud homeowners yet. We currently live in a large and actually very nice rental apartment, but we can’t stand the neighbors above and below us anymore.
At the moment, we are looking in every direction. Specifically: a new rental apartment or an affordable house to buy (or maybe even a prefabricated house?).
I personally prefer the idea of buying. My partner is a bit more uncertain about that (risks, etc.).
Our situation is that unfortunately we have very little equity right now (around 10,000 EUR). I have been self-employed for about ten years (average to good income), and my partner still needs about 7 months before becoming a permanent civil servant for life (upper service).
What do you think would be the best yet affordable solution?
My thoughts are as follows:
Renting an apartment means paying money month after month without effectively gaining anything.
Buying an older house offers many great possibilities later on, but also a lot of work.
Buying a prefabricated house means the quality might not be as good, but you get something newer that better meets your personal requirements.
I would be interested in your (experienced) opinions on this topic.
Best regards
we are not proud homeowners yet. We currently live in a large and actually very nice rental apartment, but we can’t stand the neighbors above and below us anymore.
At the moment, we are looking in every direction. Specifically: a new rental apartment or an affordable house to buy (or maybe even a prefabricated house?).
I personally prefer the idea of buying. My partner is a bit more uncertain about that (risks, etc.).
Our situation is that unfortunately we have very little equity right now (around 10,000 EUR). I have been self-employed for about ten years (average to good income), and my partner still needs about 7 months before becoming a permanent civil servant for life (upper service).
What do you think would be the best yet affordable solution?
My thoughts are as follows:
Renting an apartment means paying money month after month without effectively gaining anything.
Buying an older house offers many great possibilities later on, but also a lot of work.
Buying a prefabricated house means the quality might not be as good, but you get something newer that better meets your personal requirements.
I would be interested in your (experienced) opinions on this topic.
Best regards
Winniefred30 Dec 2018 15:34What are the typical costs for suitable existing buildings in your area? Or condominiums/apartments?
Winniefred30 Dec 2018 15:41So, are we talking about houses that need major renovations or ones you can move into right away with just a bit of paint and a new toilet seat?
Talk directly with your bank. I know from good acquaintances (two lawyers, one a public prosecutor and the other a freelance lawyer) that the bank basically only considered the salary of the tenured public prosecutor when calculating the loan; the freelance lawyer’s income was heavily reduced and recalculated to the point that it was hardly taken into account—this was in 2016. Of course, your bank might have a different approach... my father, for example, couldn’t get a mortgage at all despite years of stable self-employment (my mother’s income as an employee was too low), and this was over 20 years ago.
Talk directly with your bank. I know from good acquaintances (two lawyers, one a public prosecutor and the other a freelance lawyer) that the bank basically only considered the salary of the tenured public prosecutor when calculating the loan; the freelance lawyer’s income was heavily reduced and recalculated to the point that it was hardly taken into account—this was in 2016. Of course, your bank might have a different approach... my father, for example, couldn’t get a mortgage at all despite years of stable self-employment (my mother’s income as an employee was too low), and this was over 20 years ago.
Winniefred30 Dec 2018 15:46The equity is obviously very low; we actually had more equity right after finishing university (we financed 100% because we had just graduated shortly before, but at least we were able to cover the additional purchase costs and a few things the bank wouldn’t finance ourselves); otherwise, it wouldn’t have been possible, and that was still over €30,000.
Could you be more specific about, for example, how much your wife earns? With a €700 (about $770) monthly payment, it depends on the house. My best friend and her husband bought an affordable house in a rural area that was in good condition for about €130,000 (about $143,000), and they put in around €40,000 (about $44,000) of equity. They pay a little over €600 (about $660) per month. Plus, of course, they covered the additional purchase costs themselves.
Could you be more specific about, for example, how much your wife earns? With a €700 (about $770) monthly payment, it depends on the house. My best friend and her husband bought an affordable house in a rural area that was in good condition for about €130,000 (about $143,000), and they put in around €40,000 (about $44,000) of equity. They pay a little over €600 (about $660) per month. Plus, of course, they covered the additional purchase costs themselves.
My partner’s net income is around 2,200 EUR, and mine is about ±5,000 EUR. Our current fixed expenses, including rent, amount to roughly 2,400 EUR. I recently had some larger expenses, which is why our available equity is quite low at the moment. It has only recently become increasingly difficult to deal with the neighbors, to the point that it is now unbearable. That is why we want to move quickly or, as I believe is a better alternative, buy a house.
As long as early repayments are possible without penalties, we are comfortable with a longer loan term. The reason is that we want to be able to enjoy life alongside paying off the house, rather than putting every cent toward the mortgage for 16 years. For example, my partner’s parents have a nice single-family home in a pleasant neighborhood, but they only pay about 540 EUR per month (term 30 years).
As long as early repayments are possible without penalties, we are comfortable with a longer loan term. The reason is that we want to be able to enjoy life alongside paying off the house, rather than putting every cent toward the mortgage for 16 years. For example, my partner’s parents have a nice single-family home in a pleasant neighborhood, but they only pay about 540 EUR per month (term 30 years).