T
TraumhausMaus4 Jul 2013 14:14Hello dear house building community,
First a bit about us: my boyfriend (28) and I (25) want to build a house in the near future.
My question is,
I don’t really have any equity. My boyfriend has quite well-off and thrifty parents, and he expects a starting help of 50,000 (maybe even more) from them.
However, I have three capital-forming insurance policies for retirement, and my boyfriend has two as well.
Do these count as collateral for the bank in any way?
Now about our income:
We both work in Switzerland and have a net income after tax, health insurance, etc., of 4,844 € (9,984 USD) (from this, only life insurance, pension insurance, disability insurance, and car insurance are deducted.)
That leaves a net total of about 4,400 € (4,544 USD) (I didn’t deduct our current rent of 610 € including utilities).
Is it possible to get a loan of 300,000 € ( 330,000 USD) with this income? (50,000 € is considered equity)
We want to build a prefab house, 1.5 stories, about 150-160 square meters (1,615-1,722 square feet), with a double garage.
Land here is quite expensive, so the cost is high (230 € /m² (21.37 USD /ft²)).
The plot should cost a maximum of around 120,000 € (132,000 USD) (so about 450-520 m² (4,843-5,594 ft²)).
We plan to have two children.
I can continue my job working from home, so the income would remain.
(The first year, I would not work at all, and I would receive the highest parental allowance.)
Now to the experienced among you:
Are we dreaming too big?
Or is this possible?
We calculated that a repayment of 1,000 € (1,032 USD) per month would be no problem. Even with only my boyfriend’s income, 800 € (826 USD) would be manageable. However, we also want to save for possible setbacks (we’ve had enough in my family, so I’m very cautious) as well as for repairs that will inevitably come up sooner or later.
First a bit about us: my boyfriend (28) and I (25) want to build a house in the near future.
My question is,
I don’t really have any equity. My boyfriend has quite well-off and thrifty parents, and he expects a starting help of 50,000 (maybe even more) from them.
However, I have three capital-forming insurance policies for retirement, and my boyfriend has two as well.
Do these count as collateral for the bank in any way?
Now about our income:
We both work in Switzerland and have a net income after tax, health insurance, etc., of 4,844 € (9,984 USD) (from this, only life insurance, pension insurance, disability insurance, and car insurance are deducted.)
That leaves a net total of about 4,400 € (4,544 USD) (I didn’t deduct our current rent of 610 € including utilities).
Is it possible to get a loan of 300,000 € ( 330,000 USD) with this income? (50,000 € is considered equity)
We want to build a prefab house, 1.5 stories, about 150-160 square meters (1,615-1,722 square feet), with a double garage.
Land here is quite expensive, so the cost is high (230 € /m² (21.37 USD /ft²)).
The plot should cost a maximum of around 120,000 € (132,000 USD) (so about 450-520 m² (4,843-5,594 ft²)).
We plan to have two children.
I can continue my job working from home, so the income would remain.
(The first year, I would not work at all, and I would receive the highest parental allowance.)
Now to the experienced among you:
Are we dreaming too big?
Or is this possible?
We calculated that a repayment of 1,000 € (1,032 USD) per month would be no problem. Even with only my boyfriend’s income, 800 € (826 USD) would be manageable. However, we also want to save for possible setbacks (we’ve had enough in my family, so I’m very cautious) as well as for repairs that will inevitably come up sooner or later.
Hello,
The bank can best calculate whether you have a shortfall or sufficient income.
Make it practical: You can probably calculate yourself the standard of living you have and want to maintain. If you want to continue having a new car, new clothes, nice food, and plenty of vacations, your housing expenses should not be higher than they are now.
If you are someone who says, "I’ve experienced a lot, now it’s time for the house," then you can spend more. From both calculations, you can quickly figure out how much you want to spend, and based on this monthly expense, the bank can very quickly tell you how much you can borrow.
That’s how it was for us. I told them “this much and no more,” and from that, based on the interest rate and the desired repayment, the loan amount was determined...
The bank can best calculate whether you have a shortfall or sufficient income.
Make it practical: You can probably calculate yourself the standard of living you have and want to maintain. If you want to continue having a new car, new clothes, nice food, and plenty of vacations, your housing expenses should not be higher than they are now.
If you are someone who says, "I’ve experienced a lot, now it’s time for the house," then you can spend more. From both calculations, you can quickly figure out how much you want to spend, and based on this monthly expense, the bank can very quickly tell you how much you can borrow.
That’s how it was for us. I told them “this much and no more,” and from that, based on the interest rate and the desired repayment, the loan amount was determined...
"My friend is calculating..." => First, I would clarify whether you will actually receive the assumed 50,000 EUR (approximately 54,000 USD) from your parents-in-law.
Then, I would ask myself (no accusation intended!) why you haven’t managed to build up any equity so far with a net income of 4,400 EUR (about 4,800 USD), and how you plan to repay the loan later on? You still need to save a certain monthly amount as a reserve for unexpected costs.
How do you arrive at the 300,000 EUR (around 323,000 USD) loan? For a 150–160 square meter (about 1,615–1,720 square feet) house with a double garage, I would realistically estimate construction costs at roughly 300,000 EUR. Adding the land priced at 120,000 EUR (about 129,000 USD) brings the total to approximately 420,000 EUR.
Even if you reduce your living space to 120–130 square meters (1,290–1,400 square feet) and can manage with the 300,000 EUR loan, at a 2% repayment rate (which I believe is currently the absolute minimum), your monthly payment would be between 1,200 and 1,300 EUR (about 1,290–1,400 USD).
Then, I would ask myself (no accusation intended!) why you haven’t managed to build up any equity so far with a net income of 4,400 EUR (about 4,800 USD), and how you plan to repay the loan later on? You still need to save a certain monthly amount as a reserve for unexpected costs.
How do you arrive at the 300,000 EUR (around 323,000 USD) loan? For a 150–160 square meter (about 1,615–1,720 square feet) house with a double garage, I would realistically estimate construction costs at roughly 300,000 EUR. Adding the land priced at 120,000 EUR (about 129,000 USD) brings the total to approximately 420,000 EUR.
Even if you reduce your living space to 120–130 square meters (1,290–1,400 square feet) and can manage with the 300,000 EUR loan, at a 2% repayment rate (which I believe is currently the absolute minimum), your monthly payment would be between 1,200 and 1,300 EUR (about 1,290–1,400 USD).
T
TraumhausMaus4 Jul 2013 15:22We will definitely receive some support from his parents; his mother just hasn’t told him exactly how much it will be. However, his father once said they would pay for the land. (So, we are reasonably expecting around 50,000 for sure.) His mom always keeps 20,000 at home in a cupboard for emergencies, so I think the 50,000 is quite certain.
Why we don’t have any equity yet. (The question is obvious given our income.)
I have only been working in Switzerland for about 1.5 years and bought a new car in September 2011. Well, those 14,000 € had to be paid off first (I finished paying off the loan in December 2012).
My partner is in the same situation; he has been in Switzerland for 11 months and previously worked in Germany, where earnings are just not the same. He also bought a new car and had to finish paying that off first. (We both had old 15-year-old junk cars and decided to get that sorted before starting to build any equity.)
On top of that, we only moved in together 19 months ago; the deposit, fees, furniture, and building up equity have all been costly.
This should give you a rough idea of why we have little to no savings.
We want to build a prefabricated house, but without a basement. At 160 sqm (1,722 sq ft), the house should include a utility room and a pantry, as well as a small garden shed and a garage to provide enough storage space.
Since neither of us has any DIY skills and hardly any friends or family who can help (except for one landscape gardener in the family), we definitely want the house to be almost turnkey (we want to do or have done the flooring and wall finishes ourselves).
We have looked through many catalogs, and no shell house we like costs more than 115,000. For most, the foundation slab is even included.
How much would it cost to complete it to the point where only flooring and wall finishes remain to be done?
Why we don’t have any equity yet. (The question is obvious given our income.)
I have only been working in Switzerland for about 1.5 years and bought a new car in September 2011. Well, those 14,000 € had to be paid off first (I finished paying off the loan in December 2012).
My partner is in the same situation; he has been in Switzerland for 11 months and previously worked in Germany, where earnings are just not the same. He also bought a new car and had to finish paying that off first. (We both had old 15-year-old junk cars and decided to get that sorted before starting to build any equity.)
On top of that, we only moved in together 19 months ago; the deposit, fees, furniture, and building up equity have all been costly.
This should give you a rough idea of why we have little to no savings.
We want to build a prefabricated house, but without a basement. At 160 sqm (1,722 sq ft), the house should include a utility room and a pantry, as well as a small garden shed and a garage to provide enough storage space.
Since neither of us has any DIY skills and hardly any friends or family who can help (except for one landscape gardener in the family), we definitely want the house to be almost turnkey (we want to do or have done the flooring and wall finishes ourselves).
We have looked through many catalogs, and no shell house we like costs more than 115,000. For most, the foundation slab is even included.
How much would it cost to complete it to the point where only flooring and wall finishes remain to be done?
1.) Move away from catalog prices.
2.) By the way, a shell house means you have to do the finishing work yourself. How do you plan to manage that without any craftsmanship skills or friends to help?
3.) For every €100,000 (about $110,000) loan, you can roughly expect a monthly payment of €500 (about $550).
2.) By the way, a shell house means you have to do the finishing work yourself. How do you plan to manage that without any craftsmanship skills or friends to help?
3.) For every €100,000 (about $110,000) loan, you can roughly expect a monthly payment of €500 (about $550).
H
HilfeHilfe5 Jul 2013 07:45Hello
I understand that, as beginners in your careers, you have limited equity. I don’t want to take away your dream, but you should consider the following:
- You mentioned exchange rates. Are you cross-border commuters or living in Switzerland? In both cases, German banks will have difficulties. Besides the collateral on the property, personal liability is important to banks. Wage garnishment abroad is difficult to impossible. You should therefore inquire with banks near the border, ideally your local bank. Swiss banks, on the other hand, have difficulties financing a property in Germany 🙂
- Basically, you should ask your parents about their equity in more detail and keep gift tax thresholds in mind (otherwise the tax authorities could get involved). Check whether they want any security (e.g., a land charge / mortgage). Every bank will want proof of equity for the total financing. The parents usually have to get involved at that point. And, well, cash and border proximity... even the 20,000 EUR (about 21,500 USD) in cash could cause problems when proving funds.
Good luck!
I understand that, as beginners in your careers, you have limited equity. I don’t want to take away your dream, but you should consider the following:
- You mentioned exchange rates. Are you cross-border commuters or living in Switzerland? In both cases, German banks will have difficulties. Besides the collateral on the property, personal liability is important to banks. Wage garnishment abroad is difficult to impossible. You should therefore inquire with banks near the border, ideally your local bank. Swiss banks, on the other hand, have difficulties financing a property in Germany 🙂
- Basically, you should ask your parents about their equity in more detail and keep gift tax thresholds in mind (otherwise the tax authorities could get involved). Check whether they want any security (e.g., a land charge / mortgage). Every bank will want proof of equity for the total financing. The parents usually have to get involved at that point. And, well, cash and border proximity... even the 20,000 EUR (about 21,500 USD) in cash could cause problems when proving funds.
Good luck!