ᐅ Procedure for Building a New Single-Family Home on an Existing Plot of Land
Created on: 18 Nov 2022 07:55
D
Dachshund90
Hello everyone,
I know no one has a crystal ball here, but I would still like to hear your opinions:
We have just purchased a plot of land in Hesse, currently live cheaply, and have no urgent time pressure to build (although sooner is always better), except for the 5-year building obligation required by the municipality, which, however, can be extended by 1-2 years for justified reasons. We have slowly started planning and would like to possibly have the completed plans along with the building permit for our new single-family home ready to go, so we can react relatively quickly.
My assessment is that construction prices and interest rates will change little in 2023, even if they might stabilize at a high level. How 2024 or 2025 will look, of course, no one knows. But what is your feeling:
1. Rush the planning and possibly take advantage of a small "interest dip" in 2023 for financing and start with the belief that neither interest rates nor prices will significantly fall in the medium term, and waiting is just lost time.
2. Plan completely calmly, continue to build up equity, and assume that conditions for a new build may improve by the end of 2024 or possibly 2025.
If things become more concrete soon, I would be happy to provide more information for planning and share your feedback.
I welcome any questions and opinions 🙂
Best regards
I know no one has a crystal ball here, but I would still like to hear your opinions:
We have just purchased a plot of land in Hesse, currently live cheaply, and have no urgent time pressure to build (although sooner is always better), except for the 5-year building obligation required by the municipality, which, however, can be extended by 1-2 years for justified reasons. We have slowly started planning and would like to possibly have the completed plans along with the building permit for our new single-family home ready to go, so we can react relatively quickly.
My assessment is that construction prices and interest rates will change little in 2023, even if they might stabilize at a high level. How 2024 or 2025 will look, of course, no one knows. But what is your feeling:
1. Rush the planning and possibly take advantage of a small "interest dip" in 2023 for financing and start with the belief that neither interest rates nor prices will significantly fall in the medium term, and waiting is just lost time.
2. Plan completely calmly, continue to build up equity, and assume that conditions for a new build may improve by the end of 2024 or possibly 2025.
If things become more concrete soon, I would be happy to provide more information for planning and share your feedback.
I welcome any questions and opinions 🙂
Best regards
D
Dachshund9014 Dec 2022 12:56xMisterDx schrieb:
With the information given... what can you really do...
For example, how much is your rent? You pay that anyway, whether it’s for an apartment or a house.
Otherwise, there are some general guidelines. Don’t spend more than 35%, maximum 40%, of your net income on loan payments — so for you, that would be a maximum of 2,600 EUR (about 2,800 USD).
And the repayment rate should be at least 2%.
How much you can realistically afford to pay is something only you can decide. You know best what you’re willing to give up to achieve your dream of homeownership and what you’re not. You need to ask yourself that very realistically.
For example, it doesn’t bother me at all if I don’t go on vacation or fly anywhere. Others might see that as a significant loss of quality of life. Or maybe we’re fine with just one car...
In any case, it’s pointless to set unrealistic goals like “We’ll just live like beggars for the first 10 years,” because that won’t work. Not as a couple, and especially not with children. Thank you very much for your assessment.
I know the information is limited at first to hear opinions like yours.
We currently live rent-free.
Best regards
xMisterDx schrieb:
Otherwise, there are general rules of thumb. No more than 35%, maximum 40%, of net income should go towards the loan payment—in your case, a maximum of 2,600 EUR (approximately $2,800).
And a 2% repayment rate is advisable. There used to be rules of thumb for interest rates around 8%, and we’re moving in that direction again.
The recommendation of a maximum of 35% of income for loan payments still applies, but the repayment rate drops to 1%, and as much extra repayment as possible should be made.
Those who didn’t do this are still paying off houses from 1985–1995.
An extra repayment of 20,000 Deutsche Marks at the beginning shortened the loan term by about two years.
By the way, income is subject to inflation and tends to increase, while the loan payment remains the same.
In 15 years, you’ll smile at the low payment; our payment in 1995 was an astonishing 2,000 Deutsche Marks. 😱
W
WilderSueden14 Dec 2022 14:52I don’t think the time for 1% repayment has come yet. At 1%, the loan terms are still too long. It only works out properly well above 5%. The term is more important than the repayment rate because it takes both repayment and interest into account. If your loan term is over 25 years, consider pushing yourself a bit more and see if a higher monthly payment is possible.
D
Dachshund9014 Dec 2022 15:53Ok, the 25 or more years also depend on the age. As the name suggests, built in ’90 😉
Dachshund90 schrieb:
We have already spoken with an architect and are now waiting for the first appointment to have a professional design created based on our initial drafts. Find the mistake (see enlarged view). It sounds like an architect in quotation marks.
Dachshund90 schrieb:
We would like to carry it out with self-management, Keep in mind that every penny “saved” during the tendering phase can cost a dollar during construction.
If the client tries to be a wizard at this point, the tradespeople have sharp ears for it. 🙂
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
W
WilderSueden14 Dec 2022 16:19You’re not that young anymore. I also don’t see much point in stretching the financing until retirement. You could do that if you pay 1% interest and speculate that you’ll get a higher return elsewhere. But with 4% interest, that doesn’t work anymore; the investment would have to yield well over 5% to break even after taxes. And of course, you can also just spend the money. Spend half on alcohol and fast cars (warning: better not at the same time) and just blow the other half 😉
You should also remember that a new build doesn’t stay new forever. Eventually, the first things will break, and you’ll want to build up a maintenance reserve for that. It’s easier to do when you no longer have a loan payment.
You should also remember that a new build doesn’t stay new forever. Eventually, the first things will break, and you’ll want to build up a maintenance reserve for that. It’s easier to do when you no longer have a loan payment.