Hello everyone,
I would like to ask for some advice from experienced forum members regarding whether my building plans are reasonable.
A brief overview of our situation.
I am 33, my wife is 33, and we have a 3-year-old daughter. We want to build a bungalow of about 150m2 (1,615 sq ft). I have a plot of land measuring 649m2 (6,985 sq ft). We would also like to have around 100m2 (1,076 sq ft) of garden space next to the house.
Income:
Me: 3,000 €
Her: 1,900 €
Equity: 45,000 €
Savings: 20,000 €
We have an offer for a prefabricated house at 310,000 € exactly as we want it. Including all costs (land/ notary/ landscaping/ foundation/ house, etc.), we have planned a budget of 485,000 €. We intend to repay this with about 1,400 € monthly.
1. Question: Is the plot large enough for our needs?
2. Question: Is our budget plan reasonable and realistic?
The representative from the prefab house company said it is very likely. BUT I would really appreciate a “neutral” professional opinion as well.
Many thanks in advance for your feedback.
Best regards,
Andreas
I would like to ask for some advice from experienced forum members regarding whether my building plans are reasonable.
A brief overview of our situation.
I am 33, my wife is 33, and we have a 3-year-old daughter. We want to build a bungalow of about 150m2 (1,615 sq ft). I have a plot of land measuring 649m2 (6,985 sq ft). We would also like to have around 100m2 (1,076 sq ft) of garden space next to the house.
Income:
Me: 3,000 €
Her: 1,900 €
Equity: 45,000 €
Savings: 20,000 €
We have an offer for a prefabricated house at 310,000 € exactly as we want it. Including all costs (land/ notary/ landscaping/ foundation/ house, etc.), we have planned a budget of 485,000 €. We intend to repay this with about 1,400 € monthly.
1. Question: Is the plot large enough for our needs?
2. Question: Is our budget plan reasonable and realistic?
The representative from the prefab house company said it is very likely. BUT I would really appreciate a “neutral” professional opinion as well.
Many thanks in advance for your feedback.
Best regards,
Andreas
Personally, I find it tight. Your €1400 should be manageable, but it will take quite a long time, or you should look into securing a fixed interest rate for as long as possible. However, I consider the proposed €2000 repayment unrealistic. On top of that, there are additional costs of at least €300, more likely €400. Then there are insurance, car(s), savings, groceries, etc.
You often have to give up other things, like expensive vacations, when buying a home. Also, I think it’s unrealistic to have fully paid off the mortgage within 50 years, at least if you are over 30 years old and don’t have more than 50% equity. Still, you should try to plan until retirement or age 65.
Personally, I carefully calculated how much I can pay monthly and then determined how much repayment I need to be done by my early 60s. For us, that means a repayment rate of 3% over 25-26 years. This also works well because after 15 years, half of the loan is repaid and the interest rate risk is manageable. In my opinion, a 2% repayment rate is simply too low nowadays. Given your financing situation, the nominal interest rate probably won’t be much better than 1.8%. This means you pay about as much interest as principal repayment.
You often have to give up other things, like expensive vacations, when buying a home. Also, I think it’s unrealistic to have fully paid off the mortgage within 50 years, at least if you are over 30 years old and don’t have more than 50% equity. Still, you should try to plan until retirement or age 65.
Personally, I carefully calculated how much I can pay monthly and then determined how much repayment I need to be done by my early 60s. For us, that means a repayment rate of 3% over 25-26 years. This also works well because after 15 years, half of the loan is repaid and the interest rate risk is manageable. In my opinion, a 2% repayment rate is simply too low nowadays. Given your financing situation, the nominal interest rate probably won’t be much better than 1.8%. This means you pay about as much interest as principal repayment.
H
HilfeHilfe28 May 2016 08:23Hello, is your life planning complete? What is your current monthly savings rate, and how much is the rent? Are there any salary increases possible beyond the collective agreement? An income of 440k is definitely a significant amount. However, the price seems to be calculated solidly. There shouldn’t be any further increases.
H
HB-NH201528 May 2016 08:35Is it not possible to reduce the total volume of €485,000 (loan of €445,000) further?
Land and additional construction costs are standard.
I’m thinking more about the garden (if a large amount is planned) and, of course, the house itself.
I’ve learned that many people here in the forum assume a "5% annuity" that should be affordable.
That means with a €1,400 monthly payment, the loan would be €336,000.
Conversely, with a €445,000 loan, the monthly payment would be €1,800.
A bungalow with 150sqm (1,615 sq ft) for €310,000 seems quite expensive to me.
Especially since apparently the concrete slab isn’t even included, as you listed it under additional construction costs.
Turnkey? Which provider?
Depending on what’s included in the €310,000, there might be room to save money on selections… Do all windows really need electric roller shutters? Photovoltaic systems only pay off in the long term; for now, they just increase the investment in a less comfortable area. Planned lift-and-slide doors, and so on.
You can spend a lot of money there.
We are building a 150sqm (1,615 sq ft) prefabricated house (1.5 stories with a pitched roof) with a good mid-range prefab house provider from Northern Hesse, including concrete slab and KfW 55 standard (air-to-water heat pump & controlled residential ventilation) for €232,000.
Excluding floors/walls (except tiles in the bathrooms) and selections beyond the standard.
For materials for DIY work and upgrades, we budget about €30,000.
It’s always a question whether salaries will continue uninterrupted or if a second parental leave might be planned.
Regarding the house (possibly get additional quotes) and some simple DIY work and postponing garden landscaping, you could reduce the monthly payment a bit by lowering the loan requirement.
Land and additional construction costs are standard.
I’m thinking more about the garden (if a large amount is planned) and, of course, the house itself.
I’ve learned that many people here in the forum assume a "5% annuity" that should be affordable.
That means with a €1,400 monthly payment, the loan would be €336,000.
Conversely, with a €445,000 loan, the monthly payment would be €1,800.
A bungalow with 150sqm (1,615 sq ft) for €310,000 seems quite expensive to me.
Especially since apparently the concrete slab isn’t even included, as you listed it under additional construction costs.
Turnkey? Which provider?
Depending on what’s included in the €310,000, there might be room to save money on selections… Do all windows really need electric roller shutters? Photovoltaic systems only pay off in the long term; for now, they just increase the investment in a less comfortable area. Planned lift-and-slide doors, and so on.
You can spend a lot of money there.
We are building a 150sqm (1,615 sq ft) prefabricated house (1.5 stories with a pitched roof) with a good mid-range prefab house provider from Northern Hesse, including concrete slab and KfW 55 standard (air-to-water heat pump & controlled residential ventilation) for €232,000.
Excluding floors/walls (except tiles in the bathrooms) and selections beyond the standard.
For materials for DIY work and upgrades, we budget about €30,000.
It’s always a question whether salaries will continue uninterrupted or if a second parental leave might be planned.
Regarding the house (possibly get additional quotes) and some simple DIY work and postponing garden landscaping, you could reduce the monthly payment a bit by lowering the loan requirement.
Hello everyone,
Thank you very much for your feedback.
So...
Yes, a bungalow is always somewhat more expensive than a "regular" house.
I estimated the cost at 310,000 euros, but after initial discussions, the bungalow price has come down to about 285,000 euros.
I have a fairly good additional retirement provision, which I will partly withdraw and partly use to top up my pension.
I was thinking of using this payout as a partial mortgage repayment, roughly 40,000 euros.
I agree that the budget is tight and everything must go smoothly with my "project." I am just in the process of calculating everything, so it could also be that I will only need about 400,000 euros.
Once again, thank you very much for your feedback!
One question that still concerns me:
We want to build a KfW 40 Plus house. The manufacturer said that a soil survey is not necessary because of the modern ventilation system. Could someone here confirm if that is correct?
Best regards,
Andreas
Thank you very much for your feedback.
So...
Yes, a bungalow is always somewhat more expensive than a "regular" house.
I estimated the cost at 310,000 euros, but after initial discussions, the bungalow price has come down to about 285,000 euros.
I have a fairly good additional retirement provision, which I will partly withdraw and partly use to top up my pension.
I was thinking of using this payout as a partial mortgage repayment, roughly 40,000 euros.
I agree that the budget is tight and everything must go smoothly with my "project." I am just in the process of calculating everything, so it could also be that I will only need about 400,000 euros.
Once again, thank you very much for your feedback!
One question that still concerns me:
We want to build a KfW 40 Plus house. The manufacturer said that a soil survey is not necessary because of the modern ventilation system. Could someone here confirm if that is correct?
Best regards,
Andreas