04.11.2024
Germany is the country with the lowest real estate ownership rate in Europe. This is also because many people with average incomes have legitimate doubts about whether they can even afford the dream of owning their own four walls. With a net income of 3,000 euros, the calculation is rather sobering.
At the latest when the bank decisively rejects an advance loan request, the future prospects of owning your own home become almost unattainable. Banks and credit institutions are not acting unfavorably – they are required, within the framework of the legal provisions of the Residential Real Estate Credit Directive, to point out the risks of purchasing a property and to possibly refuse financing if reserves and income are simply not sufficient.
How much property does a net income of 3,000 euros suffice for?
The ironclad rule of thumb among financial service providers is that the monthly payment for a real estate loan should never be more than 40 percent of net income. Depending on personal circumstances and marital status, many credit institutions set the limit a little lower and only grant a loan approval if the rate amounts to a maximum of 30 percent of the monthly income. An exemplary, hypothetical calculation would then look like this: Anyone who wants to finance over 25 years with a monthly rate of 873 euros, brings 20 percent equity and is offered a super-low interest rate of 2.5 percent, can buy a property of up to one Make a purchase price of a maximum of 210,000 euros. The selection in this price range is manageable to meager.
The additional costs when buying real estate are extra
However, the purchase price of the property is far from enough: there are also real estate transfer tax, notary and land registry fees, and possibly the broker’s commission: Depending on the federal state, these additional costs add up to 10 to 15 percent of the purchase price. With a property value of 200,000 euros, that is a minimum of 20,000 euros. You must also cover these additional costs from your own funds. The bank does not finance these additional costs because there is no material equivalent to cover the risk.
What interest do I have to calculate?
The amount of equity you bring into the financing not only directly determines the amount of loan you need – it also directly affects the interest rate your bank offers you. In principle, credit institutions reward a high level of equity investment with better conditions and a cheaper interest rate. In any case it should be at least 20 percent. The interest rates that you are offered for a loan with a ten-year fixed interest rate are currently hovering around 3.3 percent. Financial market experts assume that this level will remain stable until the end of the year – before a moderate increase is expected from spring 2025.
What else you should definitely pay attention to
Never calculate your financing “on edge”. In any case, you still need a buffer for unforeseeable expenses, for renovation and furnishing. You should also choose your monthly burden so that there is room for creating reserves, vacations, birthdays and Christmas presents.
Do you want to buy a property and want to know what you can afford? Contact us. We would be happy to advise you.
This information was compiled by Krebs Immobilien e. K., your real estate agent and real estate expert for Heidelberg and the surrounding area. Visit us. We look forward to contacting you. Would you like to find out more about this topic? Then contact us now by phone or email.
