Hello,
Actually, we have been looking for an existing property since last summer. According to our mortgage broker, we have a budget of around 300,000 (all-in), which a bank is likely to approve.
The market here in Schleswig-Holstein has also become very tight, and the houses on offer are often in need of renovation, so you easily exceed the budget (especially since many city dwellers laugh at our house prices and like to secure a holiday home here).
Now the question is whether it would be possible to build a house within our budget (assuming we can get a building plot). Our requirements are not very high; it doesn’t need to be a huge house. 120 square meters (1300 square feet) would be completely sufficient.
In a neighboring village, plots are currently being developed. The price isn’t fixed yet but is expected to be below 100 euros per square meter. The plots are about 700 square meters (7500 square feet) in size. Unfortunately, we have no experience with this topic at all, and I definitely don’t want to miscalculate.
We can only contribute limited personal labor. We are not unskilled, but both fully employed with a child, dog, and horse. What are your thoughts?
Actually, we have been looking for an existing property since last summer. According to our mortgage broker, we have a budget of around 300,000 (all-in), which a bank is likely to approve.
The market here in Schleswig-Holstein has also become very tight, and the houses on offer are often in need of renovation, so you easily exceed the budget (especially since many city dwellers laugh at our house prices and like to secure a holiday home here).
Now the question is whether it would be possible to build a house within our budget (assuming we can get a building plot). Our requirements are not very high; it doesn’t need to be a huge house. 120 square meters (1300 square feet) would be completely sufficient.
In a neighboring village, plots are currently being developed. The price isn’t fixed yet but is expected to be below 100 euros per square meter. The plots are about 700 square meters (7500 square feet) in size. Unfortunately, we have no experience with this topic at all, and I definitely don’t want to miscalculate.
We can only contribute limited personal labor. We are not unskilled, but both fully employed with a child, dog, and horse. What are your thoughts?
M
motorradsilke1 Jan 2021 10:03Zaba12 schrieb:
If you don’t have other options in reserve (severance payment, inheritance, investment funds, stocks, whole life insurance policy, other properties, etc.), this approach is extremely short-sighted and, to put it mildly, unwise.
We all know how well this alternative financing model worked in the US. Property values don’t only go up, so a sale doesn’t always guarantee a profit. Unless we are talking about a prime location and you don’t mind keeping the total repayment amount relatively low. No, this isn’t a bad idea for everyone. Because for most people, a falling price doesn’t really matter. If I plan to live in my house until I die, the value is irrelevant to me.
This is also not comparable to the US, where people tend to be more mobile and usually buy several homes in their lifetime because they move more often.
This model only becomes problematic if you want or need to sell and the price drops sharply.
And of course, this model requires securing long-term financing.
M
motorradsilke1 Jan 2021 10:09Jean-Marc schrieb:
It’s quite impressive how new ways are constantly being explored to make property purchases accessible for every budget, no matter how small, fueling the ongoing boom even further...
After all, a house ages over time and will require investments later on. How is that supposed to work when the owner, even at 70 years old, is still paying off their mortgage?
One can only hope that most banks stick to their principles and don’t go along with such gimmicks. At some point, it has to end. It’s a matter of perspective. I think it’s good to have financing options available to anyone who can afford them.
M
motorradsilke1 Jan 2021 10:28Nordlys schrieb:
For anyone who can afford it.... that's the point. But those who finance it that way usually can’t really afford it. If your goal is to have the house fully paid off by retirement or death, maybe not. But you can also let go of that idea. It’s not a disaster if it’s not the case.
As mentioned, the payment obviously needs to lead to repayment, covering more than just the interest.
motorradsilke schrieb:
It’s a matter of perspective; I think it’s good that there is suitable financing available for anyone who can manage it. Planning a repayment schedule that extends well into retirement due to income constraints, because there is no alternative, while at the same time expecting to cover repayments and investment reserves from your pension later on, is clearly contradictory. Those who have to finance this way probably won’t have a pension in retirement that comfortably allows for such expenses.
In that case, retirees renting have a clear advantage, as they may still pay rent but don’t need to worry extensively about heating, roofing, windows, and so on.
The result of too many borderline financing arrangements is an increase in older homes with significant overdue maintenance and investment backlogs—more than we already have today.
M
motorradsilke1 Jan 2021 11:03Jean-Marc schrieb:
The result of too many borderline financings is that later on, we’ll have even more of these elderly people’s houses with massive investment backlogs than we already do today.So what? If the person living there feels comfortable, then it’s not a problem. It can simply be renovated later. Not everyone needs to live in a hyper-modern high-tech house.
But anyway, these types of models exist, and everyone must decide for themselves what they feel comfortable with. And there are a thousand other reasons leading to divorce. If a marriage fails because of finances, it wasn’t a strong marriage anyway and would have failed for other reasons as well.