ᐅ Is the real estate market increasingly forcing families to build their own homes?
Created on: 6 Apr 2019 11:35
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Thierse
Actually, we would prefer to avoid building. Unfortunately, existing properties within a 20 km (12 miles) radius have become quite expensive, and affordable rental houses with small gardens are simply scarce.
Until now, we have been living in an old rental apartment without a garden. We would like to change that, but there is a lack of options. The listings on various platforms are overcrowded with families looking for affordable housing.
Who is familiar with this situation, and how do you deal with it?
Until now, we have been living in an old rental apartment without a garden. We would like to change that, but there is a lack of options. The listings on various platforms are overcrowded with families looking for affordable housing.
Who is familiar with this situation, and how do you deal with it?
H
HilfeHilfe19 Apr 2019 15:33There is no problem with a 1% repayment rate. Banks set a minimum of 2%. And anyone who still chooses 1% is being unwise. But be that as it may. People buy overpriced properties and restrict their own financial breathing space.
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chand198619 Apr 2019 15:46I found Jean-Marc’s approach charming.
Modify your thinking: 1% principal repayment at the lowest possible interest rates over 20 or more years, with the goal of selling afterward. Then you see the bank as a landlord without repair obligations.
However, Germans tend not to think this way.
Modify your thinking: 1% principal repayment at the lowest possible interest rates over 20 or more years, with the goal of selling afterward. Then you see the bank as a landlord without repair obligations.
However, Germans tend not to think this way.
I think many people (myself included) see owning a home as a form of retirement planning – so naturally, they want to pay it off as quickly as possible. However, especially with current interest rates, there’s nothing wrong with a 1% repayment rate. After 20 years, you usually need a different type of home than when you were younger with children. That’s why it makes sense to build something solid, easy to sell later, and then either move to a similar house again or return to an apartment. The only problem arises if, in 20 years, the real estate market is at a low point and interest rates are very high...
We financed our first house at 4.7% and paid it off in 2006. Our current one was financed at 1.25%, and it is now fully paid because the debt-free first house in a good location provided enough equity to require very little loan. As someone who is a bit old-fashioned, I believe that having no debt is always better than having even the best debt, and owning is better than owing. Karsten
chand1986 schrieb:
I found Jean-Marc’s approach charming.
You simply adjust your thinking: 1% principal repayment with the lowest possible interest rates over 20 or more years, with the aim of selling afterward. Then you see the bank as a landlord without repair obligations.
But Germans tend not to think this way.In high-priced Denmark, for example, young families have long been offered the option to avoid any principal repayment during the first 10 years. After that, they can choose either to start repaying principal or to sell the property with any appreciated value. The bank provides a maximum of 80 percent of the mortgage lending value, and the nominal interest rate is naturally somewhat higher due to the increased risk for the bank; however, the entry barrier to homeownership is significantly lower.
It goes without saying that the savings on principal repayment should not be wasted on vacations, cars, electronics, etc., if the intention is to stay in the home after the 10 years.
Yes, Germans tend to turn up their noses at this kind of model. It is certainly not the kind of financing strategy you could casually discuss at an Easter fire without quickly receiving many astonished looks.