C
Camille198424 Jan 2019 18:44Good evening,
to gather some opinions and experiences, I have now registered in this forum after doing some reading.
Owning my own home has been a long-held dream of mine, and the desire is certainly deeply rooted in family reasons as well. Additionally, I want it as a form of retirement security, as I am currently experiencing with my parents how comfortable life can be without having to pay high rent. Whether I will really manage to make this dream come true will probably only become clear over time. For now, I just want to read some initial opinions.
Due to unfortunate events, I divorced in my early thirties and currently live with my son (6 years old) in a nice newly built apartment in a small town on the edge of the Swabian Jura. I work full-time in a senior civil service position (A13) and have lifetime tenure as a civil servant. Another partner or additional parental leave are not currently in sight, so there is no risk there. Financially, I am firmly stable. Child support is also paid regularly and reliably. However, due to the divorce, there is not much equity available.
My family is a DIY family. We really do almost everything ourselves. I am skilled in many areas, confident in my abilities, and eager to learn new things. So, a significant amount of the work will be done by ourselves. I have enough vacation time for building (feel free to criticize now ;-)). Support, experience, and contacts are also available. Detailed planning has not yet started.
My parents have provided both my brother, who is currently renovating, and me with interest-free loans of 100,000 euros each. Since I plan to build in three years (at the end of my son’s primary school years), I am currently considering whether it makes sense to buy a plot of land now and start repaying it interest-free. On the other hand, I could also save for three years and then have equity plus the interest-free loan available. However, I fear that rising land prices could erode my savings. I can also imagine that my parents would replenish the repaid amount back to 100,000 euros in three years.
My second consideration concerns the location of a potential plot. Since I come from the countryside myself, I have no problem moving back to a village. Financially, this will also be my only option. I also don’t mind being the chauffeur for my son. My parents did that for me, and I consider it part of it, even picking him up at night. Since I love winter, I could imagine moving to the Jura. That would be about 20 to 25 meters (12 to 15 miles) to my workplace. The current standard land values in the preferred locations are 109 or 124 euros per square meter. My son would then have to attend secondary school in the opposite direction from my workplace. He currently goes to primary school near where I work. We have no strong ties to our current residence (where we have lived for 2.5 years), and land there is overpriced. There is also an active community life related to my hobbies (music and a small ski lift in town).
Similar prices apply in two suburbs of the district town where I work, which would be only 12 to 15 kilometers (7 to 9 miles) from my workplace. However, these villages are less attractive, and the community activities do not really appeal to me. Since I pursue a hobby near Ulm, I would at least like to live on the right side of the Rems River, at the edge of or on the Jura, to shorten that commute.
As I said, I do not want to rush anything. I am just beginning to think about all of this. Opinions are very welcome!
Best regards
to gather some opinions and experiences, I have now registered in this forum after doing some reading.
Owning my own home has been a long-held dream of mine, and the desire is certainly deeply rooted in family reasons as well. Additionally, I want it as a form of retirement security, as I am currently experiencing with my parents how comfortable life can be without having to pay high rent. Whether I will really manage to make this dream come true will probably only become clear over time. For now, I just want to read some initial opinions.
Due to unfortunate events, I divorced in my early thirties and currently live with my son (6 years old) in a nice newly built apartment in a small town on the edge of the Swabian Jura. I work full-time in a senior civil service position (A13) and have lifetime tenure as a civil servant. Another partner or additional parental leave are not currently in sight, so there is no risk there. Financially, I am firmly stable. Child support is also paid regularly and reliably. However, due to the divorce, there is not much equity available.
My family is a DIY family. We really do almost everything ourselves. I am skilled in many areas, confident in my abilities, and eager to learn new things. So, a significant amount of the work will be done by ourselves. I have enough vacation time for building (feel free to criticize now ;-)). Support, experience, and contacts are also available. Detailed planning has not yet started.
My parents have provided both my brother, who is currently renovating, and me with interest-free loans of 100,000 euros each. Since I plan to build in three years (at the end of my son’s primary school years), I am currently considering whether it makes sense to buy a plot of land now and start repaying it interest-free. On the other hand, I could also save for three years and then have equity plus the interest-free loan available. However, I fear that rising land prices could erode my savings. I can also imagine that my parents would replenish the repaid amount back to 100,000 euros in three years.
My second consideration concerns the location of a potential plot. Since I come from the countryside myself, I have no problem moving back to a village. Financially, this will also be my only option. I also don’t mind being the chauffeur for my son. My parents did that for me, and I consider it part of it, even picking him up at night. Since I love winter, I could imagine moving to the Jura. That would be about 20 to 25 meters (12 to 15 miles) to my workplace. The current standard land values in the preferred locations are 109 or 124 euros per square meter. My son would then have to attend secondary school in the opposite direction from my workplace. He currently goes to primary school near where I work. We have no strong ties to our current residence (where we have lived for 2.5 years), and land there is overpriced. There is also an active community life related to my hobbies (music and a small ski lift in town).
Similar prices apply in two suburbs of the district town where I work, which would be only 12 to 15 kilometers (7 to 9 miles) from my workplace. However, these villages are less attractive, and the community activities do not really appeal to me. Since I pursue a hobby near Ulm, I would at least like to live on the right side of the Rems River, at the edge of or on the Jura, to shorten that commute.
As I said, I do not want to rush anything. I am just beginning to think about all of this. Opinions are very welcome!
Best regards
M
Mottenhausen25 Jan 2019 10:46Hello,
if your username corresponds to your birth year, then you are now 35, which means it’s five minutes to midnight! Banks usually finance for a maximum of 30 years, but typically not beyond retirement age. As a civil servant teacher, the bank will assume retirement at age 65.
This means that with each year you wait, your loan term decreases... 2020: 29 years... 2021: 28 years, and so on. So, with a fixed monthly payment (which you probably already have in mind), your loan amount decreases year by year. From a bank’s perspective, a personal loan of this size is less than ideal. Would there be a chance to receive it as a “gift,” also known as an early inheritance? Within the scope of your project, this could be the decisive factor between “forget about it” and “it will work.”
Roughly estimated, thanks to repaying the personal loan and being a single parent, no bank will trust you with more than €800 (approximately $880) per month. Paying €800 to the bank over 30 years totals €288,000 (about $317,000), of which at least €50,000 ($55,000) will be interest (estimated, since this is a full financing including construction incidental costs and purchase incidental costs), leaving €238,000 ($262,000). With your parents’ money, you would have approximately €338,000 ($372,000) available. For the land, based on the stated price per square meter, you can deduct €100,000 ($110,000) including all incidental costs, leaving €228,000 ($251,000) for the house. Subtracting 10% for construction incidental costs, you have about €200,000 ($220,000) left for the house and landscaping. Despite your own labor (let’s be honest: single parent, working full time, not many hours can be devoted), this will be tight.
As I said: now or never! Possibly never, because of the risk of illness or death... without a partner who can at least continue payments, the risk is very high from the bank’s point of view.
if your username corresponds to your birth year, then you are now 35, which means it’s five minutes to midnight! Banks usually finance for a maximum of 30 years, but typically not beyond retirement age. As a civil servant teacher, the bank will assume retirement at age 65.
This means that with each year you wait, your loan term decreases... 2020: 29 years... 2021: 28 years, and so on. So, with a fixed monthly payment (which you probably already have in mind), your loan amount decreases year by year. From a bank’s perspective, a personal loan of this size is less than ideal. Would there be a chance to receive it as a “gift,” also known as an early inheritance? Within the scope of your project, this could be the decisive factor between “forget about it” and “it will work.”
Roughly estimated, thanks to repaying the personal loan and being a single parent, no bank will trust you with more than €800 (approximately $880) per month. Paying €800 to the bank over 30 years totals €288,000 (about $317,000), of which at least €50,000 ($55,000) will be interest (estimated, since this is a full financing including construction incidental costs and purchase incidental costs), leaving €238,000 ($262,000). With your parents’ money, you would have approximately €338,000 ($372,000) available. For the land, based on the stated price per square meter, you can deduct €100,000 ($110,000) including all incidental costs, leaving €228,000 ($251,000) for the house. Subtracting 10% for construction incidental costs, you have about €200,000 ($220,000) left for the house and landscaping. Despite your own labor (let’s be honest: single parent, working full time, not many hours can be devoted), this will be tight.
As I said: now or never! Possibly never, because of the risk of illness or death... without a partner who can at least continue payments, the risk is very high from the bank’s point of view.
Mottenhausen schrieb:
Hello,
if your username equals your birth year, then you are now 35, which means it’s almost too late! Banks usually finance mortgages for a maximum of 30 years, but generally not beyond retirement age. As a civil servant teacher, the bank will assume retirement at age 65.
This means your loan term decreases by one year for every year you wait... 2020: 29 years... 2021: 28 years, and so on. With a fixed monthly payment (which you probably already have in mind), your loan amount will decrease year by year. From a bank’s perspective, a private loan of this amount is not ideal either. Is there any chance you could receive it as a “gift” (i.e., an early inheritance)? That could be the deciding factor for your project between: >>you can forget about it<< and >>it will work<<.
Roughly estimated, because you are repaying the private loan and are a single parent, no bank will probably approve you for more than €800 (about $880) per month. €800 per month over 30 years is €288,000, with at least €50,000 interest (estimate, considering full financing including ancillary construction and purchase costs), leaving around €238,000. With your parents’ money, you would have about €338,000 available. Assuming the land costs €100,000 (including all additional fees) at the given price per square meter, you would have €228,000 left for the house. Subtracting 10% for construction-related additional costs, approximately €200,000 remain for the house plus outdoor areas. Even with your own labor (let’s be realistic: single parenting, full-time job, not many hours are available), this will be tight.
As I said: now or never! Possibly never, because the risk of illness or death without a partner who can continue payments is very high from a bank’s perspective. Well summarized. I couldn’t have put it better with the limited information available. What doesn’t fit at the moment are the high construction costs and the single income.
If your parents gift you the €100,000, then it’s a different situation.
Talk to your main bank about how much financing you could get. Especially if the 100,000 comes as a gift.
In our case, only one person built the house and only one handled the financing. And we are a few days older.
Still, ask yourself how much you could repay each month if the absolute worst-case scenario happens and you become unable to work or are ill for a longer period.
In our case, only one person built the house and only one handled the financing. And we are a few days older.
Still, ask yourself how much you could repay each month if the absolute worst-case scenario happens and you become unable to work or are ill for a longer period.
C
Camille198425 Jan 2019 11:48Thank you for your honest opinions!
I plan to sit down with my parents soon. A gift has never been considered so far because my brother would have to receive it as well. He is paying them back but has a much higher combined income with his wife. But maybe something is still possible.
When my parents built their house, they had a small car and gave up a lot in the first years. They also did a lot of work themselves. I am also willing to make sacrifices, especially in that regard. Taking a vacation as a single parent isn’t really relaxing anyway. One advantage is that I know exactly when my salary will increase and when things will improve financially.
Having learned from past experience, I will definitely build and finance on my own if possible, without a partner. Then the house will belong to me no matter what happens. I am completely unromantic about this now.
However, I see that it will probably be impossible without a gift. Loans are available here only for individuals with lifetime civil servant status. I have colleagues who have such loans. There are risks: if something goes wrong, the house has to be sold and I would be out of luck. If I should die, my son would have to live elsewhere anyway, so the house would have to go. An insurance policy protects against inherited debts.
Apart from the finances, how do you assess the discussion about the choice of place to live?
I plan to sit down with my parents soon. A gift has never been considered so far because my brother would have to receive it as well. He is paying them back but has a much higher combined income with his wife. But maybe something is still possible.
When my parents built their house, they had a small car and gave up a lot in the first years. They also did a lot of work themselves. I am also willing to make sacrifices, especially in that regard. Taking a vacation as a single parent isn’t really relaxing anyway. One advantage is that I know exactly when my salary will increase and when things will improve financially.
Having learned from past experience, I will definitely build and finance on my own if possible, without a partner. Then the house will belong to me no matter what happens. I am completely unromantic about this now.
However, I see that it will probably be impossible without a gift. Loans are available here only for individuals with lifetime civil servant status. I have colleagues who have such loans. There are risks: if something goes wrong, the house has to be sold and I would be out of luck. If I should die, my son would have to live elsewhere anyway, so the house would have to go. An insurance policy protects against inherited debts.
Apart from the finances, how do you assess the discussion about the choice of place to live?
C
Camille198425 Jan 2019 11:53One more comment that might make me unpopular.
In case of illness, I continue to receive my full salary, even for several years. Permanent disability would indeed be a problem. I have had substantial accident insurance since childhood. So the remaining risk is a serious illness leading to early retirement. I will check when and how much I would receive.
And to confirm the stereotypes: I have 12 weeks of vacation. Surely, something can be arranged.
In case of illness, I continue to receive my full salary, even for several years. Permanent disability would indeed be a problem. I have had substantial accident insurance since childhood. So the remaining risk is a serious illness leading to early retirement. I will check when and how much I would receive.
And to confirm the stereotypes: I have 12 weeks of vacation. Surely, something can be arranged.