ᐅ Compromises in the Property Location and Initial Questions
Created on: 8 Dec 2016 10:24
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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!
Winniefred12 Dec 2016 17:29Yes, it’s probably something like that. But I’m not looking for experiences that I want to hear here, rather for normal, genuine experiences. I personally know many people who made compromises on their original plans because of an inheritance (since it was much cheaper to take the inherited house), and almost all of them regret it afterward (compromises in location, house size, layout, forced cohabitation with parents/in-laws due to their housing rights, etc.). These are not secondhand stories but from close friends and even family. And this is exactly the trap we want to avoid.
As I said, my girlfriend is moving out here into the countryside, about 30km (19 miles) away. Out here, you’re really in the middle of nowhere. But that’s what they want, it’s not about the money. They could certainly afford a townhouse in the city. Fortunately, houses there only cost about one-third as much. But above all, they WANT it this way. I envy them a little for that. Sometimes we wish we could imagine that for ourselves too. Then we could buy a nice existing house in nature for about 120,000 and renovate it nicely.
As I said, my girlfriend is moving out here into the countryside, about 30km (19 miles) away. Out here, you’re really in the middle of nowhere. But that’s what they want, it’s not about the money. They could certainly afford a townhouse in the city. Fortunately, houses there only cost about one-third as much. But above all, they WANT it this way. I envy them a little for that. Sometimes we wish we could imagine that for ourselves too. Then we could buy a nice existing house in nature for about 120,000 and renovate it nicely.
That’s exactly the point. If that’s what they want, then it’s not a compromise. In your case, the decision is already made, or based on what you said, I would also advise you to stay in the city. Your consideration is purely financial, but in the short or long term, that will likely cause a lot of frustration or end up costing you a lot of money—if you move back to the city again.
Best regards
Dirk Grafe
Best regards
Dirk Grafe
H
HilfeHilfe12 Dec 2016 18:20Hello,
yes, we do. But only to ease our conscience. Net income adjusted for private health insurance is €4,500 per month (about $4,850) plus bonuses.
We have moved away from a single-family house costing €450,000 (about $485,000) or more, and instead decided on a condominium in a two-family house with a loan of €250,000 (about $270,000).
We are doing great! We have a much better standard than renting and can afford everything.
yes, we do. But only to ease our conscience. Net income adjusted for private health insurance is €4,500 per month (about $4,850) plus bonuses.
We have moved away from a single-family house costing €450,000 (about $485,000) or more, and instead decided on a condominium in a two-family house with a loan of €250,000 (about $270,000).
We are doing great! We have a much better standard than renting and can afford everything.
We acquired a plot of land at a very good price (about 30% below market value), with the downside being that it is located on a road used by all traffic in the residential area. We considered this acceptable.
If we regret the decision, we can at worst sell the house including the land again... The choice was simply made based on these points.
If we regret the decision, we can at worst sell the house including the land again... The choice was simply made based on these points.
S
Steffen8012 Dec 2016 19:34We spent a long time carefully considering whether we were willing to pay over 300,000 for a plot of land (in a prime location). Basically, we thought that money was too much to spend on just the land.
The deciding factor in favor was that we can sell the house again at a reasonable price at any time, and most likely without much loss. Try doing that in a rural area. Only 10 meters (6 miles) away, plots cost just one-fifth of that 🙂
The deciding factor in favor was that we can sell the house again at a reasonable price at any time, and most likely without much loss. Try doing that in a rural area. Only 10 meters (6 miles) away, plots cost just one-fifth of that 🙂