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.
D
Doc.Schnaggls20 Jan 2015 16:22Usually, a standard mortgage with fixed monthly payments is used.
If you know exactly when you will start building in the future, you can also choose a fixed interest rate period of one or two years if you find a variable loan too "uncertain." However, repaying the loan before the end of this fixed period would typically incur a prepayment penalty, provided the bank agrees at all.
Currently, hardly anyone in the financial sector is expecting a significant increase in interest rates over the next two years.
If you know exactly when you will start building in the future, you can also choose a fixed interest rate period of one or two years if you find a variable loan too "uncertain." However, repaying the loan before the end of this fixed period would typically incur a prepayment penalty, provided the bank agrees at all.
Currently, hardly anyone in the financial sector is expecting a significant increase in interest rates over the next two years.
D
Doc.Schnaggls20 Jan 2015 16:33ductom81 schrieb:
and... if we are absolutely certain that the bank financing the land will also finance the house in 1 or 2 years, how does that work then?That may be true, that the bank will also finance the house – but in any case, it will be under the bank’s terms, which you will then be bound to.
ductom81 schrieb:
what still keeps bothering me is the topic of renting out. The rent we could charge is definitely higher than the loan payments we have to coverRenting out the new house?
Never ever – I’ve seen too many things go wrong with renting. I’ve had several cases among my clients where landlords ended up financially ruined because of tenants who were either unable or, even worse, unwilling to pay...
D
Doc.Schnaggls20 Jan 2015 16:37Hmm, yes, the consideration is quite justifiable.
Is the "old" house still under a loan? In that case, the interest on the loan might still be tax-deductible – it’s best to consult a tax advisor about this.
Is the "old" house still under a loan? In that case, the interest on the loan might still be tax-deductible – it’s best to consult a tax advisor about this.
Yes, my current house (which I want to move out of) still has a mortgage of about €98,000.
Now I am exploring all options to move out of the house wisely and financially securely and to build or buy another one.
Renting it out is also a consideration. The monthly mortgage payment is around €650, while the local rent for a similar property is usually about €950 or more.
I have not yet looked into the risks associated with renting it out...
The selling price for the house is around €220,000, so there could be a potential net profit of about €100,000 if additional selling costs are deducted.
It’s all quite confusing when you’re not an expert.
Now I am exploring all options to move out of the house wisely and financially securely and to build or buy another one.
Renting it out is also a consideration. The monthly mortgage payment is around €650, while the local rent for a similar property is usually about €950 or more.
I have not yet looked into the risks associated with renting it out...
The selling price for the house is around €220,000, so there could be a potential net profit of about €100,000 if additional selling costs are deducted.
It’s all quite confusing when you’re not an expert.