ᐅ Preliminary Planning for House Construction – Realistic Assessment of Feasibility
Created on: 7 Aug 2018 22:48
J
jackdaniels
Hello everyone,
My girlfriend and I are currently in the preliminary planning stages of building a house. We have already decided to go with a prefabricated house and have found one that we like. It is the Point 173 from Danwood. The price listed online is €188,300 (about $188,300), but we understand that this is probably the price for the most basic configuration. Therefore, we have roughly estimated a budget of €350,000 to €400,000 (about $350,000 to $400,000).
We already have a plot of land, just under 1000m² (approximately 10,700 sq ft), equity of around €30,000 (about $30,000), a building savings contract (Bausparvertrag) with €12,000 (about $12,000), and the option to take a loan of another €15,000 (about $15,000) from a second building savings contract.
My net income is approximately €3,900 (about $3,900), and my girlfriend’s is about €1,550 (about $1,550).
Now to the questions:
1. Is the house price realistic?
2. Is repaying the loan within a maximum of 20 years realistic?
My girlfriend and I are currently in the preliminary planning stages of building a house. We have already decided to go with a prefabricated house and have found one that we like. It is the Point 173 from Danwood. The price listed online is €188,300 (about $188,300), but we understand that this is probably the price for the most basic configuration. Therefore, we have roughly estimated a budget of €350,000 to €400,000 (about $350,000 to $400,000).
We already have a plot of land, just under 1000m² (approximately 10,700 sq ft), equity of around €30,000 (about $30,000), a building savings contract (Bausparvertrag) with €12,000 (about $12,000), and the option to take a loan of another €15,000 (about $15,000) from a second building savings contract.
My net income is approximately €3,900 (about $3,900), and my girlfriend’s is about €1,550 (about $1,550).
Now to the questions:
1. Is the house price realistic?
2. Is repaying the loan within a maximum of 20 years realistic?
H
Heiderdaus8 Aug 2018 15:43Yes, the land counts as equity. The value of the future property (for which you provide the mortgage to the financing bank) includes the land, so the loan amount is proportionally lower and thus the interest rate is also lower.
I’m not familiar with the prices in your area, but 400,000 (currency) might be tight, depending heavily on the size of the house. There won’t be much luxury in that budget.
The additional costs can quickly add up. Just the landscaping alone can easily consume 50,000 (currency) if you include some paving, fences, and possibly required tree planting and soakaways.
Connection fees for electricity, water, and sewer can reach five figures, plus the cost to restore the sidewalk/road after construction, etc.
Beware of development charges if it’s a new residential area!
Generally, 20 years is the minimum loan term. Realistically, you should plan for 30 years, if your age allows.
You should expect to pay about 2,000 (currency) per month to actually start reducing the principal. This is possible with a net income of 3,900 (currency), even on a single salary; with a family and homeownership, you tend to spend less on leisure activities—experience speaking after 10 years in a condominium and now building a house ;-)
General recommendation: Get your OWN site manager to occasionally supervise the construction, even if the prefabricated house company gives many reasons why this is unnecessary. It costs several thousand (currency), but the company’s site manager is employed by them, while your manager works solely in your interest. Otherwise, the company might quickly close the walls before you notice any mistakes... and you probably don’t have the knowledge to judge what meets standards and what doesn’t.
Good luck and stay patient ;-)
I’m not familiar with the prices in your area, but 400,000 (currency) might be tight, depending heavily on the size of the house. There won’t be much luxury in that budget.
The additional costs can quickly add up. Just the landscaping alone can easily consume 50,000 (currency) if you include some paving, fences, and possibly required tree planting and soakaways.
Connection fees for electricity, water, and sewer can reach five figures, plus the cost to restore the sidewalk/road after construction, etc.
Beware of development charges if it’s a new residential area!
Generally, 20 years is the minimum loan term. Realistically, you should plan for 30 years, if your age allows.
You should expect to pay about 2,000 (currency) per month to actually start reducing the principal. This is possible with a net income of 3,900 (currency), even on a single salary; with a family and homeownership, you tend to spend less on leisure activities—experience speaking after 10 years in a condominium and now building a house ;-)
General recommendation: Get your OWN site manager to occasionally supervise the construction, even if the prefabricated house company gives many reasons why this is unnecessary. It costs several thousand (currency), but the company’s site manager is employed by them, while your manager works solely in your interest. Otherwise, the company might quickly close the walls before you notice any mistakes... and you probably don’t have the knowledge to judge what meets standards and what doesn’t.
Good luck and stay patient ;-)
Heiderdaus schrieb:
I’m not familiar with the prices up there, but 400k could be tight, of course it depends heavily on the size of the house. There won’t be much luxury included.They are cheaper than elsewhere, see other posts.
Five years ago, our additional building costs were only 20,500 (around 22,600) ... flat land without rock or flood risk...
H
HilfeHilfe8 Aug 2018 17:08The plot of land only counts as equity if it is unencumbered. If there is a mortgage or lien on it that has not been released, there will be disadvantages.
J
jackdaniels8 Aug 2018 17:09We are aware that additional costs can quickly become quite high. This is not a new development area, but rather half of my mother’s property. All the houses there were built in the 1950s. It is flat land situated on a small elevation, with no risk of flooding. According to my mother, there are no restrictions on this building plot. However, this should probably be verified more thoroughly. Utility connections are available up to my mother’s house but would, of course, need to be extended accordingly.
The costs for this would, of course, need to be inquired about.
I find €2000 (approximately $2,100) quite high, even €3900 (approximately $4,100). Clearly, this amount increases over time while the mortgage payment remains fixed, but living costs in general also rise year by year.
We also somewhat hope that in 5 or 6 years my mother will be able to look after our children when she retires. That way, we could keep the period with only one income plus parental allowance relatively short. But such assumptions should not be the basis for planning; it is better to approach the financing conservatively.
There is no land charge (mortgage lien) on the property. Therefore, it can be used as equity.
The costs for this would, of course, need to be inquired about.
I find €2000 (approximately $2,100) quite high, even €3900 (approximately $4,100). Clearly, this amount increases over time while the mortgage payment remains fixed, but living costs in general also rise year by year.
We also somewhat hope that in 5 or 6 years my mother will be able to look after our children when she retires. That way, we could keep the period with only one income plus parental allowance relatively short. But such assumptions should not be the basis for planning; it is better to approach the financing conservatively.
There is no land charge (mortgage lien) on the property. Therefore, it can be used as equity.
J
jackdaniels8 Aug 2018 18:13She gave it to me at the beginning of this year, so it was transferred to me. It belongs to me alone.
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