Hello everyone,
I need some help and advice and hope to get a few suggestions on how to proceed.
In 2010, we bought an end-terrace house in northern Berlin in a very desirable location (120 sqm (1,292 sq ft) living space, 250 sqm (2,691 sq ft) garden, 3 floors, parking space, excellent infrastructure) at a very favorable price (bankruptcy sale).
This house is now to be sold for a new construction project, as private circumstances have changed and the house no longer meets many of our new requirements.
What is the best way to proceed here?
How can one coordinate the sale of the current house with the new project?
What options are there to handle this financially in the smartest way possible?
What risks should be considered?
What does a term like “property swap” mean in this context?
There is still an outstanding loan on our current house of about €98,000.
According to our research, the market value is around €200,000. Is it correct to assume that €200,000 sale proceeds minus €98,000 remaining loan and prepayment penalty equals my net profit?
The property has been continuously owner-occupied by us (so no capital gains tax to consider?).
Regarding the new construction project
We have clear ideas about the new house and have set a maximum budget of €350,000 for all related costs.
We have a net monthly income of €4,700, which I believe is above average. Are these assumptions realistic?
It would be great to receive some guidance or suggestions here.
I need some help and advice and hope to get a few suggestions on how to proceed.
In 2010, we bought an end-terrace house in northern Berlin in a very desirable location (120 sqm (1,292 sq ft) living space, 250 sqm (2,691 sq ft) garden, 3 floors, parking space, excellent infrastructure) at a very favorable price (bankruptcy sale).
This house is now to be sold for a new construction project, as private circumstances have changed and the house no longer meets many of our new requirements.
What is the best way to proceed here?
How can one coordinate the sale of the current house with the new project?
What options are there to handle this financially in the smartest way possible?
What risks should be considered?
What does a term like “property swap” mean in this context?
There is still an outstanding loan on our current house of about €98,000.
According to our research, the market value is around €200,000. Is it correct to assume that €200,000 sale proceeds minus €98,000 remaining loan and prepayment penalty equals my net profit?
The property has been continuously owner-occupied by us (so no capital gains tax to consider?).
Regarding the new construction project
We have clear ideas about the new house and have set a maximum budget of €350,000 for all related costs.
We have a net monthly income of €4,700, which I believe is above average. Are these assumptions realistic?
It would be great to receive some guidance or suggestions here.
nordanney schrieb:
1. Bridge financing: You receive a loan equivalent to your (expected) profit. This loan has a short term, for example one year, and is not repaid during this period. At the end of the term, the loan is repaid from the proceeds or profit of the sale. It serves as preliminary or interim financing of your equity currently tied up in real estate.
2. House as leverage: You use the rented house (which increases your income) as collateral for the bank financing your new house. This way, you can obtain a higher loan than if you only secured the new house and contributed cash (which also increases the total repayment amount). Depending on your rental income and the interest rate on the loan, this can also have tax advantages. However, this should be discussed with a tax advisor, for example regarding the possible division of loans and their allocation to the rented property.Do both methods at least temporarily convert equity into cash?
To put this into a calculation example again:
New project: 350,000
House sale: 200,000
Net profit after repaying remaining debt and interim interest approximately 95,000
I transfer 80,000 to the bank in the form of bridging finance and receive a loan for which I only pay interest
The remaining loan of 270,000 is then covered by an amortizing loan
Have I understood this roughly correctly?
...from Eiphone
New project: 350,000
House sale: 200,000
Net profit after repaying remaining debt and interim interest approximately 95,000
I transfer 80,000 to the bank in the form of bridging finance and receive a loan for which I only pay interest
The remaining loan of 270,000 is then covered by an amortizing loan
Have I understood this roughly correctly?
...from Eiphone
N
nordanney8 Jan 2015 14:50@ductom81: yes!
Hello. I'm bringing this topic up again. Our project has a financial scope of about 350,000 to 400,000 euros.
Without going into too much detail... we have a monthly budget of 4,600 € (about 4,600 USD) available... 2 children... no other financial obligations.
Is this realistic?
Without going into too much detail... we have a monthly budget of 4,600 € (about 4,600 USD) available... 2 children... no other financial obligations.
Is this realistic?