Hello community,
I have already read through many threads, and thanks to Bauexperte and others, I now have a realistic idea of what our house would cost.
We are currently a family of four. My wife (27) will start a well-paid part-time job this fall, and I (38) will become a civil servant in July. In short, from October on, we will have about 3000 euros of disposable income after all expenses. We currently rent at a reasonable price thanks to a federal housing program, and we also live in an idyllic setting in one of the nicest districts of Cologne, next to a park, in a quiet residential area. The 3 rooms are enough for the two of us and our two small daughters, but we still wish to have 2-3 more children in the next 10 years.
As equity, excluding our emergency reserve of 25,000 euros, we have the sale proceeds of about 150,000 euros from my parents’ terraced house, which is still rented out. The plot of land (305m2 (3283 sq ft)) would cost 100,000 euros if we were awarded the purchase.
For the house, we had in mind a semi-detached house with a full basement, geothermal heat pump, a converted attic, and a garage. The house size would be 7x12m (23x39 feet), which means about 170m2 (1830 sq ft) of living space.
After a conservative estimate, including Bauexperte’s experience, I came to 370,000 euros for the house including all additional construction costs, garage, garden, etc., with a 10,000 euro buffer.
That would mean we would need a loan of around 320,000 euros.
Originally, before I found this forum, I had looked at prices for single-family and semi-detached houses from manufacturers, and rough estimates were mostly around 250,000 euros. But I did not realize there would be so many additional expenses. I was mentally prepared for a loan of 200,000 euros, but the extra 120,000 euros seem quite hefty for us to manage. I had no idea that building a house would be this expensive. The problem is that right now we would be building somewhat beyond our current needs, but considering more children on the way, we would need that space reserved. I don’t know if it makes sense to limit ourselves to 120m2 (1290 sq ft) and then, with 2-3 additional children in 10 years, find out our house is too small… to then sell and build new?
On the other hand, a loan of 320,000 euros feels astronomical. At a 3-4% repayment rate, it would take about 18-20 years to be debt-free. During that time, we would have a maximum of 2000 euros left for living after all obligations are paid.
So my general consideration and request for your feedback is this: we are currently thinking about giving up the house-building project and continuing to rent. If the need arises with child number 3 or 4, we would have to move out anyway. Possibly, buying the apartment in the coming years at special conditions could be an option, and later selling it for a profit on the open market (from when do you not have to pay taxes on that?). That would increase our equity, but I think this would be a question of about 10 years.
On the other hand, building and living in a larger home would mean using the space with the children now, instead of waiting 10 years to buy or build when more equity is available. And when do children really need a house? I believe especially when they are small, right?
What are your thoughts on our situation? What would you advise?
So far, we have lived without any debt – what is it like to have a high monthly repayment? Is there still money left for vacations, investments, or does the house become the all-dominant center of life for the next 10-15 years?
Thank you for your opinions!
Best regards
sw1008
I have already read through many threads, and thanks to Bauexperte and others, I now have a realistic idea of what our house would cost.
We are currently a family of four. My wife (27) will start a well-paid part-time job this fall, and I (38) will become a civil servant in July. In short, from October on, we will have about 3000 euros of disposable income after all expenses. We currently rent at a reasonable price thanks to a federal housing program, and we also live in an idyllic setting in one of the nicest districts of Cologne, next to a park, in a quiet residential area. The 3 rooms are enough for the two of us and our two small daughters, but we still wish to have 2-3 more children in the next 10 years.
As equity, excluding our emergency reserve of 25,000 euros, we have the sale proceeds of about 150,000 euros from my parents’ terraced house, which is still rented out. The plot of land (305m2 (3283 sq ft)) would cost 100,000 euros if we were awarded the purchase.
For the house, we had in mind a semi-detached house with a full basement, geothermal heat pump, a converted attic, and a garage. The house size would be 7x12m (23x39 feet), which means about 170m2 (1830 sq ft) of living space.
After a conservative estimate, including Bauexperte’s experience, I came to 370,000 euros for the house including all additional construction costs, garage, garden, etc., with a 10,000 euro buffer.
That would mean we would need a loan of around 320,000 euros.
Originally, before I found this forum, I had looked at prices for single-family and semi-detached houses from manufacturers, and rough estimates were mostly around 250,000 euros. But I did not realize there would be so many additional expenses. I was mentally prepared for a loan of 200,000 euros, but the extra 120,000 euros seem quite hefty for us to manage. I had no idea that building a house would be this expensive. The problem is that right now we would be building somewhat beyond our current needs, but considering more children on the way, we would need that space reserved. I don’t know if it makes sense to limit ourselves to 120m2 (1290 sq ft) and then, with 2-3 additional children in 10 years, find out our house is too small… to then sell and build new?
On the other hand, a loan of 320,000 euros feels astronomical. At a 3-4% repayment rate, it would take about 18-20 years to be debt-free. During that time, we would have a maximum of 2000 euros left for living after all obligations are paid.
So my general consideration and request for your feedback is this: we are currently thinking about giving up the house-building project and continuing to rent. If the need arises with child number 3 or 4, we would have to move out anyway. Possibly, buying the apartment in the coming years at special conditions could be an option, and later selling it for a profit on the open market (from when do you not have to pay taxes on that?). That would increase our equity, but I think this would be a question of about 10 years.
On the other hand, building and living in a larger home would mean using the space with the children now, instead of waiting 10 years to buy or build when more equity is available. And when do children really need a house? I believe especially when they are small, right?
What are your thoughts on our situation? What would you advise?
So far, we have lived without any debt – what is it like to have a high monthly repayment? Is there still money left for vacations, investments, or does the house become the all-dominant center of life for the next 10-15 years?
Thank you for your opinions!
Best regards
sw1008
What you should be advised... no idea. Apparently, you are happy with how things are.
If you actually have 3000 € left after deducting your obligations, then financially nothing stands in the way of such a construction project.
We didn’t have to finance as much because we had more equity, but managing the financing works quite well. We chose a repayment rate similar to our previous rent (about 1000 € monthly). At this rate, it would take us 36 years to pay off our loan, but we have a good buffer to make special repayments of at least 5000 € annually, making the goal of paying off the property in 20 years very realistic.
You shouldn’t make your financing too tight, and you need to secure flexibility. We can often change the repayment rate without any fees and have the right to make special repayments of up to 10% per year. We had to negotiate these rights with the banks.
This way, we can keep repayments minimal now to finish the house and increase payments from next year onward.
If you plan to have more children, you definitely need to factor that in. The best approach we found is that your salary should cover the financing and family living expenses. Your partner’s income then becomes, so to speak, luxury money or special repayment funds. This is how it is for us.
Everything I earn can be spent, while my partner’s income (currently parental allowance) goes into a savings account used for house and garden expenses or if there are complaints about the car again or if a vacation needs to be funded.
Personally, I believe that with five children you should definitely live in a house. With a garden and space for the children to play. In rental apartments, eventually, there will be disputes with neighbors about the children’s “noise.”
I expected house building to be expensive, but I never imagined it would be this expensive. If I had known the figures on my list today before signing, we would not have built.
We built 150 sqm (1615 sq ft) without a basement on a 700 sqm (7500 sq ft) plot, built to KFW 55 standard. By now, with all costs included — moving, new furniture, etc. — there is a 4 in front of the total sum. An incredible number.
But calculate 30 years of monthly rent at 1000 €, and that number is at least just as harsh.
It is and remains your decision, and probably the hardest one you’ve made so far in your life.
If you actually have 3000 € left after deducting your obligations, then financially nothing stands in the way of such a construction project.
We didn’t have to finance as much because we had more equity, but managing the financing works quite well. We chose a repayment rate similar to our previous rent (about 1000 € monthly). At this rate, it would take us 36 years to pay off our loan, but we have a good buffer to make special repayments of at least 5000 € annually, making the goal of paying off the property in 20 years very realistic.
You shouldn’t make your financing too tight, and you need to secure flexibility. We can often change the repayment rate without any fees and have the right to make special repayments of up to 10% per year. We had to negotiate these rights with the banks.
This way, we can keep repayments minimal now to finish the house and increase payments from next year onward.
If you plan to have more children, you definitely need to factor that in. The best approach we found is that your salary should cover the financing and family living expenses. Your partner’s income then becomes, so to speak, luxury money or special repayment funds. This is how it is for us.
Everything I earn can be spent, while my partner’s income (currently parental allowance) goes into a savings account used for house and garden expenses or if there are complaints about the car again or if a vacation needs to be funded.
Personally, I believe that with five children you should definitely live in a house. With a garden and space for the children to play. In rental apartments, eventually, there will be disputes with neighbors about the children’s “noise.”
I expected house building to be expensive, but I never imagined it would be this expensive. If I had known the figures on my list today before signing, we would not have built.
We built 150 sqm (1615 sq ft) without a basement on a 700 sqm (7500 sq ft) plot, built to KFW 55 standard. By now, with all costs included — moving, new furniture, etc. — there is a 4 in front of the total sum. An incredible number.
But calculate 30 years of monthly rent at 1000 €, and that number is at least just as harsh.
It is and remains your decision, and probably the hardest one you’ve made so far in your life.
Well, our rent is currently 412€ for 72sqm (775 sq ft) in Cologne, so we definitely need to choose much higher repayment rates if we don’t want our grandchildren to still be paying it off. Financial freedom is important to me, meaning I want to build and live comfortably but not necessarily give up the annual vacation or restrict myself too much otherwise. The house should not become a burden, but rather a means to an end, that is, a home for the children.
This leads me to consider setting the repayment rate a bit lower, fully aware that this will extend the loan term to 25 or even 30 years. However, there might be the possibility of selling my parents’ house where they currently live and paying off the remaining debt after about 15 years when the fixed interest period ends.
During a low-interest phase like now, it should theoretically make sense to choose a longer loan term and make full use of the maximum fixed interest period. This way, with a lower repayment rate, you have more financial flexibility and, if you have arranged for special repayments, the chance to pay off the loan earlier with additional payments – who can really predict 15 to 20 years into the future?
I’m slowly coming to terms with the enormous loan amount. As long as our life and livelihood are not destroyed by it and we can maintain a frugal lifestyle just like we do now (yes, we buy the offers from local flyers and yes, I compare prices when refueling, shopping, and save where it makes sense, but out of conviction).
Maybe someone here can share their experiences as well – the previous post helped us a lot.
This leads me to consider setting the repayment rate a bit lower, fully aware that this will extend the loan term to 25 or even 30 years. However, there might be the possibility of selling my parents’ house where they currently live and paying off the remaining debt after about 15 years when the fixed interest period ends.
During a low-interest phase like now, it should theoretically make sense to choose a longer loan term and make full use of the maximum fixed interest period. This way, with a lower repayment rate, you have more financial flexibility and, if you have arranged for special repayments, the chance to pay off the loan earlier with additional payments – who can really predict 15 to 20 years into the future?
I’m slowly coming to terms with the enormous loan amount. As long as our life and livelihood are not destroyed by it and we can maintain a frugal lifestyle just like we do now (yes, we buy the offers from local flyers and yes, I compare prices when refueling, shopping, and save where it makes sense, but out of conviction).
Maybe someone here can share their experiences as well – the previous post helped us a lot.
Off the record, I can add the following:
We could pay off more each month, but we deliberately choose not to because we don’t really want to adjust our lifestyle. Especially now, as we are starting a family with our first child and possibly a second soon. You want to be able to treat yourself a little.
As mentioned before, the house is only slightly more expensive than our rent but offers a huge added value.
We have a fixed interest rate for 20 years, and even if things go really badly, we would still have a remaining debt of about 150,000 € (roughly 160,000 USD). Even if interest rates rise to 8 or 10%, the monthly payment would only be about 400 € (about 430 USD) more than it is now. For two professionals, this should be manageable, even if the kids start university at some point.
In the worst case, the bank makes a lot of money from us, but whether it’s the bank or a landlord, it’s pretty much the same to me.
Sure, it will be nice someday when the house actually belongs to us, but then you have to start thinking about where to wisely invest your money again. Right now, I’m very happy not to have to worry about that. Before building the house, I could watch the inflation rate eat up the little interest we earned. Every month, we added quite a bit, knowing that the amount in the bank was effectively shrinking.
But no one can get me into stocks or funds that quickly—I just don’t trust them.
ypg put it well: relaxed repayment rates lead to relaxed residents 🙂
We could pay off more each month, but we deliberately choose not to because we don’t really want to adjust our lifestyle. Especially now, as we are starting a family with our first child and possibly a second soon. You want to be able to treat yourself a little.
As mentioned before, the house is only slightly more expensive than our rent but offers a huge added value.
We have a fixed interest rate for 20 years, and even if things go really badly, we would still have a remaining debt of about 150,000 € (roughly 160,000 USD). Even if interest rates rise to 8 or 10%, the monthly payment would only be about 400 € (about 430 USD) more than it is now. For two professionals, this should be manageable, even if the kids start university at some point.
In the worst case, the bank makes a lot of money from us, but whether it’s the bank or a landlord, it’s pretty much the same to me.
Sure, it will be nice someday when the house actually belongs to us, but then you have to start thinking about where to wisely invest your money again. Right now, I’m very happy not to have to worry about that. Before building the house, I could watch the inflation rate eat up the little interest we earned. Every month, we added quite a bit, knowing that the amount in the bank was effectively shrinking.
But no one can get me into stocks or funds that quickly—I just don’t trust them.
ypg put it well: relaxed repayment rates lead to relaxed residents 🙂