ᐅ Compromises in the Property Location and Initial Questions
Created on: 8 Dec 2016 10:24
W
Winniefred
Hello!
I’m new here. I work part-time, and my husband is a full-time IT professional. We have two small children and are both still under 30.
For some time now, we have been considering building a house. Our bank has calculated a possible loan amount of €210,000. We want to keep our monthly payments to a maximum of €1,200 so we can still enjoy a good quality of life, and we want to fully repay the loan in no more than 15 years. We worked with the bank using very conservative assumptions (only one income, no salary increases, etc.) so that we could finance it with peace of mind.
However, in our city, houses like the one we want now cost around €400,000. We’re looking for a house with about 100-140m2 (1,076-1,506 square feet) of living space on a plot no larger than 700m2 (7,535 square feet). We want something modest and standard, with no special demands. Property prices in the city, even on the outskirts, have skyrocketed. Properties under €350,000 usually require extensive renovation, which pushes the total cost back up to €400,000 or more. That sum is simply too high and risky for us. Paying off over 30 years or sacrificing our lifestyle for 20-25 years is not an option. Condominiums aren’t much cheaper either—those typically still cost around €350,000, with no upper limit. In short: everything we can afford is further away than we would like.
My husband’s parents own a plot in a suburb that we could have. On that land, we could build our dream bungalow with our budget of €210,000, including landscaping (at least the paving and a carport; the rest of the yard is fine). The plot is just under 700m2 (7,535 square feet), well-shaped, fully developed with utilities, fenced, and flat. With this plot plus our savings, we would have substantial equity (over 40%) and could finance everything comfortably without stress. We know the area and the neighbors well; my husband grew up there, and we’ve lived there before. There is access to tram, bus, and commuter trains, plus full infrastructure like doctors and schools. The drawback is that it’s 17 kilometers (about 11 miles) from our main city. It’s a nice place, friendly, but it’s simply not “our” city, the one we love. In our city, however, we simply cannot afford anything under our self-imposed conditions. Objectively, nothing speaks against this small town: you can get to the main station in the big city within 15 minutes by commuter train, and a large shopping center is just 10 minutes away.
Have any of you made compromises regarding location? The difference is quite significant. Especially for us, since the plot is already available and wouldn’t need to be purchased for about €130,000 as a similar plot would on the outskirts of the city. And then it would be our dream home, not some awkwardly laid-out second-hand semi-detached house. But is it still reasonable to buy at all? Or would it be better just to remain renters and stay in the city we love? Our current rent is €1,000 all-inclusive, which is actually a bargain for a 102m2 (1,098 square feet) apartment in a nicely renovated older building on the city outskirts. The suburb would be another 10 kilometers (6 miles) further out...
City properties here sell very quickly. There’s no room for negotiation. But once you go to the suburbs or outskirts, prices can be really low.
So as you can see, we’re going in circles. On one hand, we want to own a home. This isn’t driven by fear of rising interest rates—that has always been our wish. On the other hand, we’re afraid to regret compromising on location. But we also don’t want to buy seriously overpriced property that we’d have to pay off for decades. Even if we relaxed our repayment goals, factoring in extra payments, pay raises, and extending the loan term to 20 years, it wouldn’t get us a loan amount of €400,000. Maybe €300,000 to €350,000 max, which would only cover a condominium.
Maybe you have some suggestions or could share your experiences and thoughts.
Thanks!
I’m new here. I work part-time, and my husband is a full-time IT professional. We have two small children and are both still under 30.
For some time now, we have been considering building a house. Our bank has calculated a possible loan amount of €210,000. We want to keep our monthly payments to a maximum of €1,200 so we can still enjoy a good quality of life, and we want to fully repay the loan in no more than 15 years. We worked with the bank using very conservative assumptions (only one income, no salary increases, etc.) so that we could finance it with peace of mind.
However, in our city, houses like the one we want now cost around €400,000. We’re looking for a house with about 100-140m2 (1,076-1,506 square feet) of living space on a plot no larger than 700m2 (7,535 square feet). We want something modest and standard, with no special demands. Property prices in the city, even on the outskirts, have skyrocketed. Properties under €350,000 usually require extensive renovation, which pushes the total cost back up to €400,000 or more. That sum is simply too high and risky for us. Paying off over 30 years or sacrificing our lifestyle for 20-25 years is not an option. Condominiums aren’t much cheaper either—those typically still cost around €350,000, with no upper limit. In short: everything we can afford is further away than we would like.
My husband’s parents own a plot in a suburb that we could have. On that land, we could build our dream bungalow with our budget of €210,000, including landscaping (at least the paving and a carport; the rest of the yard is fine). The plot is just under 700m2 (7,535 square feet), well-shaped, fully developed with utilities, fenced, and flat. With this plot plus our savings, we would have substantial equity (over 40%) and could finance everything comfortably without stress. We know the area and the neighbors well; my husband grew up there, and we’ve lived there before. There is access to tram, bus, and commuter trains, plus full infrastructure like doctors and schools. The drawback is that it’s 17 kilometers (about 11 miles) from our main city. It’s a nice place, friendly, but it’s simply not “our” city, the one we love. In our city, however, we simply cannot afford anything under our self-imposed conditions. Objectively, nothing speaks against this small town: you can get to the main station in the big city within 15 minutes by commuter train, and a large shopping center is just 10 minutes away.
Have any of you made compromises regarding location? The difference is quite significant. Especially for us, since the plot is already available and wouldn’t need to be purchased for about €130,000 as a similar plot would on the outskirts of the city. And then it would be our dream home, not some awkwardly laid-out second-hand semi-detached house. But is it still reasonable to buy at all? Or would it be better just to remain renters and stay in the city we love? Our current rent is €1,000 all-inclusive, which is actually a bargain for a 102m2 (1,098 square feet) apartment in a nicely renovated older building on the city outskirts. The suburb would be another 10 kilometers (6 miles) further out...
City properties here sell very quickly. There’s no room for negotiation. But once you go to the suburbs or outskirts, prices can be really low.
So as you can see, we’re going in circles. On one hand, we want to own a home. This isn’t driven by fear of rising interest rates—that has always been our wish. On the other hand, we’re afraid to regret compromising on location. But we also don’t want to buy seriously overpriced property that we’d have to pay off for decades. Even if we relaxed our repayment goals, factoring in extra payments, pay raises, and extending the loan term to 20 years, it wouldn’t get us a loan amount of €400,000. Maybe €300,000 to €350,000 max, which would only cover a condominium.
Maybe you have some suggestions or could share your experiences and thoughts.
Thanks!
No one can make the decision for you. However, once you have made a choice, you need to fully commit to it; otherwise, you won’t be happy. Everyone who has built or bought a home has made compromises of some kind, so it doesn’t help to question your decision afterward. All options are valid and are lived by thousands of people every day who are satisfied with their choice.
Relatively briefly: If I were in your position, I would choose the suburb. You have already listed all the positive points yourself (good location for children, short distances to shops, drivable distance to the city, etc.). Of course, selling later might not be easy, but initially, I would focus on myself and my children, not on a potential future sale (renting out could also be an option).
We recently built as well and made compromises regarding the location. Although my wife had firmly said, "No one will get me out of my hometown," we moved to the neighboring town. Why? Because here we get a bigger house for less money. The location is ideal for our child and also suitable for us, but the land prices are simply lower. Since we are in the Ruhr area, my wife can get back to her favorite city quickly by car or public transport, so it works out. But yes, compared to our original plan, we definitely made a conscious compromise here.
We recently built as well and made compromises regarding the location. Although my wife had firmly said, "No one will get me out of my hometown," we moved to the neighboring town. Why? Because here we get a bigger house for less money. The location is ideal for our child and also suitable for us, but the land prices are simply lower. Since we are in the Ruhr area, my wife can get back to her favorite city quickly by car or public transport, so it works out. But yes, compared to our original plan, we definitely made a conscious compromise here.
Bieber0815 schrieb:
There is an underlying assumption that property values always increase. This is not necessarily true. Also, all the additional costs we pay today are not recovered when selling and must be paid again when buying a new property. Renters do not face this in the same way.No, I didn’t mean that the value of the property will definitely increase. I meant that you get money back when selling, whereas as a renter you usually only get your deposit back.
Best regards,
Sabine
Curly schrieb:
No, I didn’t mean that the property’s value will necessarily increase. I meant that when you sell, you get some money back, whereas as a renter you usually only get your deposit back.
Best regards,
Sabine However, I have to agree with Bieber here. Following your logic, making a loss would actually be preferable to renting.
I wouldn’t always agree with that. It really depends on the case. 😉
B
Bieber08158 Dec 2016 15:46Curly schrieb:
I meant that when you sell, you get money back, whereas as a renter you usually only get your security deposit refunded. That only applies to a debt-free house. And hopefully, the tenant can also balance that with their assets... Anyway, this is, in my humble opinion, beyond the scope here and has already been discussed many times (both here and elsewhere, under the topic "Buying vs. Renting").
I would simply make a list
What would I be missing if I moved out of the big city?
What alternatives are there in the small town?
With the commuter train connection, you really get to the city quickly.
What advantages does living in a small town offer that the city does not?
Maybe you’ll find a solution this way.
Renting in the big city
Semi-detached house in the big city with a longer mortgage term
Dream house in the small town with the desired loan duration but something is missing.
Without knowing your situation, I would move to the small town.
When I see how my niece (big city) enjoys the space every time she's at our place and also how loud she can be, etc.
My sister needs 45 minutes by commuter train from the station to her apartment, and it’s the same city even beyond the town sign.
I once lived in the big city and moved to the neighboring small town after one year, and I found it ideal. As a single person in my early to mid-20s
- Great bus connections, especially the night buses (important if you’re going to clubs every evening)
- I was in the city just as often as before—meeting friends, shopping, gym, etc. The distance was longer in kilometers, but the travel time was shorter
- Lower rent, nicer apartments, everything important within walking distance, parking space, doctor nearby, quiet
What would I be missing if I moved out of the big city?
What alternatives are there in the small town?
With the commuter train connection, you really get to the city quickly.
What advantages does living in a small town offer that the city does not?
Maybe you’ll find a solution this way.
Renting in the big city
Semi-detached house in the big city with a longer mortgage term
Dream house in the small town with the desired loan duration but something is missing.
Without knowing your situation, I would move to the small town.
When I see how my niece (big city) enjoys the space every time she's at our place and also how loud she can be, etc.
My sister needs 45 minutes by commuter train from the station to her apartment, and it’s the same city even beyond the town sign.
I once lived in the big city and moved to the neighboring small town after one year, and I found it ideal. As a single person in my early to mid-20s
- Great bus connections, especially the night buses (important if you’re going to clubs every evening)
- I was in the city just as often as before—meeting friends, shopping, gym, etc. The distance was longer in kilometers, but the travel time was shorter
- Lower rent, nicer apartments, everything important within walking distance, parking space, doctor nearby, quiet