Hello everyone,
I am married and have a one-year-old son.
My wife and I are both 30 years old.
We come from the area south of Baden-Württemberg – around Freiburg.
Both of us have above-average incomes.
My wife is currently on parental leave.
We finally acquired a plot of land three months ago through a private sale at a reasonable price.
[300m2 (3200 sq ft) for about 125,000 Euros including additional costs].
Now we have gathered several offers from prefabricated house suppliers, both solid construction and timber frame, etc.
When we calculated everything, the total cost of the entire building project—without the land, including additional costs, exterior works, kitchen, etc.—comes to about 600,000 Euros, truly turnkey, with a buffer included.
Here is the problem.
With the current interest rate, despite owning the land outright [equity], we cannot finance it.
The monthly burden is too high (around 2300–2500 Euros, including an L-Bank loan, which is currently basically in limbo with the state bank).
My idea is to buy a condominium first.
(Secure the land, fully paid (125,000 Euros)).
Our current apartment is too small for the long term.
Financing a condominium would be much easier since the loan amount is significantly lower than for building a house.
We will definitely inherit something in the coming years (the older generation has not yet passed anything on in advance, unfortunately, when it was needed).
My plan would be to buy and live in the condo, paying it off monthly.
Once the inheritance comes through, fully pay off the condo and then build the house. That way, we have the security of owning a paid-off condo and monthly rental income to support the repayment of the house loan.
What do you think? Do you have other ideas?
Regards,
Peter
I am married and have a one-year-old son.
My wife and I are both 30 years old.
We come from the area south of Baden-Württemberg – around Freiburg.
Both of us have above-average incomes.
My wife is currently on parental leave.
We finally acquired a plot of land three months ago through a private sale at a reasonable price.
[300m2 (3200 sq ft) for about 125,000 Euros including additional costs].
Now we have gathered several offers from prefabricated house suppliers, both solid construction and timber frame, etc.
When we calculated everything, the total cost of the entire building project—without the land, including additional costs, exterior works, kitchen, etc.—comes to about 600,000 Euros, truly turnkey, with a buffer included.
Here is the problem.
With the current interest rate, despite owning the land outright [equity], we cannot finance it.
The monthly burden is too high (around 2300–2500 Euros, including an L-Bank loan, which is currently basically in limbo with the state bank).
My idea is to buy a condominium first.
(Secure the land, fully paid (125,000 Euros)).
Our current apartment is too small for the long term.
Financing a condominium would be much easier since the loan amount is significantly lower than for building a house.
We will definitely inherit something in the coming years (the older generation has not yet passed anything on in advance, unfortunately, when it was needed).
My plan would be to buy and live in the condo, paying it off monthly.
Once the inheritance comes through, fully pay off the condo and then build the house. That way, we have the security of owning a paid-off condo and monthly rental income to support the repayment of the house loan.
What do you think? Do you have other ideas?
Regards,
Peter
B
BackSteinGotik10 Jan 2023 07:45Tassimat schrieb:
Why on earth should the bank only consider one salary? According to your rule of thumb, the mentioned €5200 (about $5600) would be enough for a €600,000 loan.This outdated rule applied when interest rates were low. Now it’s different. The bank will first apply significantly higher standard living expense allowances (due to inflation, energy costs) and then calculate a realistic repayment amount based on that. With €600,000 and €100,000 equity, a 2% principal repayment over 10 years results in a monthly payment of around €2800 (about $3000). Getting approval from the bank with an income of only €5200 (about $5600) per month is likely very difficult or impossible.
With high interest rates, a 1% repayment rate becomes feasible again. This way, the loan can be fully paid off in about 40 years. Considering an inheritance as a backup, I believe a minimum repayment rate is justifiable.
The question to @irmsche remains: How much is the bank willing to lend you at most?
The question to @irmsche remains: How much is the bank willing to lend you at most?
W
WilderSueden10 Jan 2023 09:12Tassimat schrieb:
Why on earth would you only show one salary to the bank?? According to your rule of thumb, the mentioned €5200 (about $5600) is enough for a €600,000 (about $650,000) loan.Because only one salary currently exists? As a rule, banks do not accept promises like "I will soon be earning X again."
WilderSueden schrieb:
Because there is currently only one income?
Usually, banks do not accept promises like "I will start earning X again soon."It is possible if you have it in writing. We had the same situation with our first house. I had my employer prepare a document stating that from date X I would resume working X hours. The bank took that into account.