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
Hi sw1008,
I can share how we’re doing things. We’re still in the middle of it, so not experts yet ;-) We’re probably about your age and already have four children, all still young. At the moment, we’re renting 85sqm (915 sq ft) and managing fine. But we need something bigger. We looked for a suitable rental for a long time, but didn’t find anything or if we did, we couldn’t get it (“4 kids, help!”). Now we’re building, even though our jobs aren’t permanently fixed yet—we’re still planning on moving. The job situation is good for us, so we’re willing to commit to a location with a house. Signing for such a large loan gives you some initial stomach aches. We did it this way: in the worst case, the higher earner’s salary must cover living expenses and the loan. And that’s possible and should even get easier over time. Although of course the kids also get more expensive again.
We’re building 7 rooms in just under 170sqm (1,830 sq ft). We won’t need all of them at first, so a few guest or work rooms will be extra ;-) We actually wanted to go with less space, but no employed architect from a general contractor had a good idea. Building with a freelance architect is much more expensive, though. We’re of course hiring outside experts now for construction supervision and similar tasks, which would normally be done by the architect. But we’re happy with that. So far—we’ve only signed a planning contract; next week things get serious.
Sorry, I went off-topic ;-) If I were you, I’d build starting with a low repayment rate and arrange for extra repayments. That way you can be done before 20 years. Unless you end up with 10 kids :-)
Good luck, Mecc
I can share how we’re doing things. We’re still in the middle of it, so not experts yet ;-) We’re probably about your age and already have four children, all still young. At the moment, we’re renting 85sqm (915 sq ft) and managing fine. But we need something bigger. We looked for a suitable rental for a long time, but didn’t find anything or if we did, we couldn’t get it (“4 kids, help!”). Now we’re building, even though our jobs aren’t permanently fixed yet—we’re still planning on moving. The job situation is good for us, so we’re willing to commit to a location with a house. Signing for such a large loan gives you some initial stomach aches. We did it this way: in the worst case, the higher earner’s salary must cover living expenses and the loan. And that’s possible and should even get easier over time. Although of course the kids also get more expensive again.
We’re building 7 rooms in just under 170sqm (1,830 sq ft). We won’t need all of them at first, so a few guest or work rooms will be extra ;-) We actually wanted to go with less space, but no employed architect from a general contractor had a good idea. Building with a freelance architect is much more expensive, though. We’re of course hiring outside experts now for construction supervision and similar tasks, which would normally be done by the architect. But we’re happy with that. So far—we’ve only signed a planning contract; next week things get serious.
Sorry, I went off-topic ;-) If I were you, I’d build starting with a low repayment rate and arrange for extra repayments. That way you can be done before 20 years. Unless you end up with 10 kids :-)
Good luck, Mecc
Hello,
try calculating a bit differently: In a few years, you plan to have 2 to 3 children. Let’s assume 2 more children. Obviously, your current 72 sqm (775 sq ft) would no longer be sufficient.
According to the 2012 rent index, the average price for an apartment of about 120 sqm (1,292 sq ft) in Cologne is €8.68 per sqm (€8.68 per sq ft). That would mean over €1,000 per month for the landlord, about €12,000 per year.
That was the average price. Now, since you live in one of the nicest districts with parks and other amenities nearby, if we take the highest rent for a 120 sqm (1,292 sq ft) apartment (€11.05 per sqm / €11.05 per sq ft), you would pay around €1,326 per month, nearly €16,000 for the landlord annually.
Recently on the radio, I heard that rental prices for new contracts can already be more than 40% above the local average rent: €1,326 + 40% = €1,800 (okay, worst case, but Cologne is quite attractive).
Who knows how much rents will rise in 3 to 5 years.
Even with €320,000, you can arrange good financing with a monthly cost of about €1,300 (we have that too!).
But: rents keep increasing, while the loan installments stay fixed.
My parents chose financing back in 1980 that cost them 900 Deutsche Mark a month then. Today they pay only €450 (they refinanced along the way – another topic) and have a large house. Their own home!
If you still have your parents’ home as a fallback, you can approach the situation more relaxed.
Best regards
Julia
try calculating a bit differently: In a few years, you plan to have 2 to 3 children. Let’s assume 2 more children. Obviously, your current 72 sqm (775 sq ft) would no longer be sufficient.
According to the 2012 rent index, the average price for an apartment of about 120 sqm (1,292 sq ft) in Cologne is €8.68 per sqm (€8.68 per sq ft). That would mean over €1,000 per month for the landlord, about €12,000 per year.
That was the average price. Now, since you live in one of the nicest districts with parks and other amenities nearby, if we take the highest rent for a 120 sqm (1,292 sq ft) apartment (€11.05 per sqm / €11.05 per sq ft), you would pay around €1,326 per month, nearly €16,000 for the landlord annually.
Recently on the radio, I heard that rental prices for new contracts can already be more than 40% above the local average rent: €1,326 + 40% = €1,800 (okay, worst case, but Cologne is quite attractive).
Who knows how much rents will rise in 3 to 5 years.
Even with €320,000, you can arrange good financing with a monthly cost of about €1,300 (we have that too!).
But: rents keep increasing, while the loan installments stay fixed.
My parents chose financing back in 1980 that cost them 900 Deutsche Mark a month then. Today they pay only €450 (they refinanced along the way – another topic) and have a large house. Their own home!
If you still have your parents’ home as a fallback, you can approach the situation more relaxed.
Best regards
Julia
Thank you all for your contributions. This house-building forum feels like a family gathering place where even (future) extended families are warmly welcome—thank you!
I think we will now apply for the plot of land. If we are awarded the bid, we will first need to sell my brother’s house to pay for the land and then take out the mortgage.
How did you approach financing? Can I already make a non-binding inquiry? What is the best place to start (mortgage broker, online, or the main bank) or is it better to wait until we have the land? Is it harmful to ask the bank about a loan in advance?
After reading your posts, I now also see the idea of “repaying more flexibly” in a different light. It is important to me that with a loan, I can adjust the repayment amount or schedule flexibly. For me, this means a mortgage is not something to get rid of quickly after construction but rather something that belongs to homeownership and the property itself. Therefore, it should be chosen so that there is some financial flexibility remaining.
Do banks generally charge penalties or limit the number of repayment adjustments I can make before no more changes are allowed?
I think we will now apply for the plot of land. If we are awarded the bid, we will first need to sell my brother’s house to pay for the land and then take out the mortgage.
How did you approach financing? Can I already make a non-binding inquiry? What is the best place to start (mortgage broker, online, or the main bank) or is it better to wait until we have the land? Is it harmful to ask the bank about a loan in advance?
After reading your posts, I now also see the idea of “repaying more flexibly” in a different light. It is important to me that with a loan, I can adjust the repayment amount or schedule flexibly. For me, this means a mortgage is not something to get rid of quickly after construction but rather something that belongs to homeownership and the property itself. Therefore, it should be chosen so that there is some financial flexibility remaining.
Do banks generally charge penalties or limit the number of repayment adjustments I can make before no more changes are allowed?
We first went to our local bank and felt completely misled. Everything seemed aimed at pushing us into as many building savings contracts as possible.
Fortunately, at some point I stopped understanding anything and just left.
For the annuity loan, they only wanted to offer us 15 years at 4% interest (we have almost 50% equity). This was at the beginning of 2011.
After that, we went to an independent mortgage broker who requested a loan for us from the same bank, under the same conditions. His special terms got us a 20-year loan at just over 3% interest.
I have since closed my account at the local bank.
What we received after several inquiries:
20 years fixed
3.0% including KFW50 share
12 months interest-free loan commitment period (very important)
10% prepayment option
5 free interest rate adjustment options
The bank is not allowed to sell the loan without our consent
Fortunately, at some point I stopped understanding anything and just left.
For the annuity loan, they only wanted to offer us 15 years at 4% interest (we have almost 50% equity). This was at the beginning of 2011.
After that, we went to an independent mortgage broker who requested a loan for us from the same bank, under the same conditions. His special terms got us a 20-year loan at just over 3% interest.
I have since closed my account at the local bank.
What we received after several inquiries:
20 years fixed
3.0% including KFW50 share
12 months interest-free loan commitment period (very important)
10% prepayment option
5 free interest rate adjustment options
The bank is not allowed to sell the loan without our consent
sw1008 schrieb:
Well, in 20 years I would also need to set aside some money to financially support my children during their studies and training – that’s why.Oops... sorry, I don’t know anyone and have never met anyone who plans for that when the kids are still small. Either you have some extra funds as parents later on or you don’t... It just happens that way. Children are supposed to become independent... financial handouts shouldn’t be taken for granted.
Now, since I have only skimmed through these long threads, I gathered that financing can be tight, so you have to decide what and when you want or can offer your children. No one has to play the role of a millionaire, but I respect everyone’s personal attitude on that.
Personally, I would provide my children—and of course myself, if there are good reasons—with a home of their own. For that, the perpetual student will have to work later on 😉