Hello everyone,
I have been an active reader here for a long time. I have already discovered many useful tips and learned a lot from you. Thank you for that.
Now to the actual "problem."
We live in a nice 4-room condominium, which we have almost paid off – the value of the apartment is about 380,000 euros (approx. $410,000), with current debt of around 115,000 euros (approx. $124,000). There is about 90,000 euros (approx. $97,000) in our bank account. After the fixed interest period ends (beginning of 2022), we could make use of the special repayment option and pay off the remaining amount in full. That is the background.
Our municipality will sell about 50 plots of land in a new development area this spring (the infrastructure work is in full progress). Since we have two children, our chances of getting a building plot are good.
Price: about 300 euros per square meter (approx. $325 per square meter).
We would like to build. Since I am a teacher, I need a dedicated home office. I am tired of constantly working at the kitchen table. School materials are scattered all over the living room.
I estimate that the dream of owning a home would cost us about 600,000 euros (approx. $650,000).
About our income:
Monthly net income: he earns 2,600 euros (approx. $2,800), I earn 2,500 euros (approx. $2,700) working 75%, private health insurance already deducted, plus child benefits of 400 euros (approx. $430), totaling 5,500 euros (approx. $6,000).
How should we best proceed now?
a) Pay off the apartment completely, sell it, and finance only the difference?
b) Keep the apartment, rent it out (rent about 900 euros (approx. $975)), do not pay it off, but take on additional debt to finance part of the house?
c) Use the equity as a down payment for the land (+ a small variable loan), sell the apartment after the fixed interest period ends, pay off the remaining debt with the proceeds, and put the remaining "profit" into the new house...
d) ???????
I know that was a lot. I hope you can help me a little...
I have been an active reader here for a long time. I have already discovered many useful tips and learned a lot from you. Thank you for that.
Now to the actual "problem."
We live in a nice 4-room condominium, which we have almost paid off – the value of the apartment is about 380,000 euros (approx. $410,000), with current debt of around 115,000 euros (approx. $124,000). There is about 90,000 euros (approx. $97,000) in our bank account. After the fixed interest period ends (beginning of 2022), we could make use of the special repayment option and pay off the remaining amount in full. That is the background.
Our municipality will sell about 50 plots of land in a new development area this spring (the infrastructure work is in full progress). Since we have two children, our chances of getting a building plot are good.
Price: about 300 euros per square meter (approx. $325 per square meter).
We would like to build. Since I am a teacher, I need a dedicated home office. I am tired of constantly working at the kitchen table. School materials are scattered all over the living room.
I estimate that the dream of owning a home would cost us about 600,000 euros (approx. $650,000).
About our income:
Monthly net income: he earns 2,600 euros (approx. $2,800), I earn 2,500 euros (approx. $2,700) working 75%, private health insurance already deducted, plus child benefits of 400 euros (approx. $430), totaling 5,500 euros (approx. $6,000).
How should we best proceed now?
a) Pay off the apartment completely, sell it, and finance only the difference?
b) Keep the apartment, rent it out (rent about 900 euros (approx. $975)), do not pay it off, but take on additional debt to finance part of the house?
c) Use the equity as a down payment for the land (+ a small variable loan), sell the apartment after the fixed interest period ends, pay off the remaining debt with the proceeds, and put the remaining "profit" into the new house...
d) ???????
I know that was a lot. I hope you can help me a little...
You can only do that within ten minutes of creation, so not anymore now.
You should also share a bit more about yourselves: Are you planning to have more children? Will you return to full-time work eventually? What are your living expenses like? What monthly payment do you currently have for your apartment? (Have you fully paid for it so far?) How large are the plots of land offered, approximately? What kind of house do you have in mind? And so on. It’s best to work through the questionnaire here: https://www.hausbau-forum.de/threads/informationen-um-dein-finanzierung-angebot-bewerten-zu-koennen.18200/
You should also share a bit more about yourselves: Are you planning to have more children? Will you return to full-time work eventually? What are your living expenses like? What monthly payment do you currently have for your apartment? (Have you fully paid for it so far?) How large are the plots of land offered, approximately? What kind of house do you have in mind? And so on. It’s best to work through the questionnaire here: https://www.hausbau-forum.de/threads/informationen-um-dein-finanzierung-angebot-bewerten-zu-koennen.18200/
N
nordanney27 Oct 2020 14:04Kati.com schrieb:
a) Pay off the apartment completely, sell it, and finance only the difference? That would be my first choice. Buy the land using equity / a variable loan, carefully plan your house, and when it’s time to arrange financing, plan to sell the apartment (which will probably only happen in 2022 anyway).
Kati.com schrieb:
b) Keep the apartment, rent it out (rent around €900), Yield before tax under 3%. The existing mortgage must be paid off, with low deductible expenses. A bad idea if you need money for building a house.
Kati.com schrieb:
c) Use equity for purchasing the land (+ a small variable loan), sell the apartment after the fixed interest period, pay off the remaining debt from the proceeds, and put the remaining “profit” into the new house... That’s basically option a). Any bank will pre-finance the sales proceeds for you.
Thank you for the quick responses.
That was my first thought as well.
The apartment is really nice, spacious, and high-end. It would be a shame to rent it out to strangers...
On the other hand, I’m thinking: You have two kids (and that’s it). Maybe it wouldn’t be a bad idea to keep the apartment (ground floor with garden, plus elevator) as a backup for old age. If something goes wrong, I can still sell it… hmm...
In the next post, I will write a bit more about us and our exact ideas regarding the concept of a “house.”
Bookstar schrieb:
Sell the apartment, otherwise the house will get too cramped. 600k will probably not be enough for you, depending on your requirements. Plan for around 800k.
That was my first thought as well.
The apartment is really nice, spacious, and high-end. It would be a shame to rent it out to strangers...
On the other hand, I’m thinking: You have two kids (and that’s it). Maybe it wouldn’t be a bad idea to keep the apartment (ground floor with garden, plus elevator) as a backup for old age. If something goes wrong, I can still sell it… hmm...
In the next post, I will write a bit more about us and our exact ideas regarding the concept of a “house.”