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
Elina schrieb:
Why do you actually have to pay for a car in cash? Who can do that anyway... I personally see no problem with fully financing a car. It doesn’t have to be a 30,000 euro (about 33,000 USD) car. That’s how we’ve always done it so far (always = twice, and we haven’t had more cars in our lives). And the banks have never complained about it.
Not having a large amount of equity itself isn’t a big deal either, as long as the income situation fits and the banks give their approval. However, the additional purchase costs should definitely be paid from equity, simply because otherwise the entire loan becomes more expensive. To me, a car is a consumer good, and I would never finance something like that. If a 30,000 euro (about 33,000 USD) car is not affordable, then it will just be a cheaper used one, as long as it’s paid off. That’s just my attitude.
My house construction project fell through, but I wouldn’t have even considered it without 20% equity.
H
hemali20031 Jan 2019 01:48I have no problem financing my car! But I have to be aware that a car – whether financed or paid in cash – costs a certain amount per month to acquire. This was true in the past and will be true in the future. So if I used to spend my savings on cars and vacations, and now want to invest that money into a house, I need to ask myself where the money for vacations and the car will suddenly come from.
This should definitely be factored into the monthly expenses. It’s not an excuse for the question, "What did you do with all that money in the past?"
This should definitely be factored into the monthly expenses. It’s not an excuse for the question, "What did you do with all that money in the past?"
I share a similar view to hemali.
Honestly, I often don’t understand why home financing with little or no equity is viewed so negatively here. For example, we both completed university and only recently, in our late twenties, started full-time careers. On top of that, we have been repaying student loans and owning a car is necessary. So where is a large amount of equity supposed to come from, unless you inherit or something similar?
But why shouldn’t we buy or build a house if the monthly income is sufficient? Saving for years to accumulate significant equity, while facing higher interest rates later and continuing to pay rent in the meantime, doesn’t really make sense either.
Honestly, I often don’t understand why home financing with little or no equity is viewed so negatively here. For example, we both completed university and only recently, in our late twenties, started full-time careers. On top of that, we have been repaying student loans and owning a car is necessary. So where is a large amount of equity supposed to come from, unless you inherit or something similar?
But why shouldn’t we buy or build a house if the monthly income is sufficient? Saving for years to accumulate significant equity, while facing higher interest rates later and continuing to pay rent in the meantime, doesn’t really make sense either.
Winniefred1 Jan 2019 08:36I think the same. We both studied and had two children during our studies. Since we both kept working, we were able to save some equity, but not a huge amount. In the end, it was enough for the additional purchase costs and a bit more, allowing us to buy a house shortly after graduation. But of course, it was a full financing—if we had saved longer and waited, we would have ended up paying a lot more for the house and significantly more interest.
In the case of the original poster and his wife, it seems their equity probably wouldn’t even cover the additional purchase costs, even though they have both been earning for several years and not badly either. On top of that is the desire to keep the monthly payment around €700. Naturally, that leaves very little room. In a low-price area, however, they could certainly afford a cheap house in my opinion. They do need a bit more equity, but theoretically, with their income, that should be quick to save up.
Oh, and Happy New Year!
In the case of the original poster and his wife, it seems their equity probably wouldn’t even cover the additional purchase costs, even though they have both been earning for several years and not badly either. On top of that is the desire to keep the monthly payment around €700. Naturally, that leaves very little room. In a low-price area, however, they could certainly afford a cheap house in my opinion. They do need a bit more equity, but theoretically, with their income, that should be quick to save up.
Oh, and Happy New Year!
H
hemali20031 Jan 2019 08:44We also had little equity. At first, we earned little, then got married and had children. After that, we spent about 1.5 years carefully reviewing how much money we could realistically save. When we managed to put aside 25,000 euros (approximately 27,000 US dollars), and we knew our financial situation was more likely to improve than worsen, we decided to take the leap.
Thanks to meticulous financial planning, I already knew beforehand that it would work out. But many people simply don’t have a complete overview of where their money actually goes...
Thanks to meticulous financial planning, I already knew beforehand that it would work out. But many people simply don’t have a complete overview of where their money actually goes...
More equity invested means significantly higher security for both the homeowner and the bank. I would not take full financing lightly. As long as everything is going well health-wise, professionally, and personally, it’s fine, but unexpected difficulties can cause serious problems very quickly. If you have to sell the property prematurely, there is a high risk of ending up without a home but still with debt. Keyword: early repayment penalty.