Saving money when building a house? That was the topic of a telephone campaign for readers of the “Schwäbische Zeitung”. Timo Schmidt from the Association of Private Building Societies and the freelance civil engineer Jürgen Fiedler answered the readers’ questions. Here is the summary.
How do I find affordable financing?
Calculate the total costs as accurately as possible and check how much equity you can use. The more equity and equity substitutes – personal contributions, paid-for land or building society funds – you use, the cheaper the financing. Compare different offers. Banks and building societies each have their own terms and conditions. This can make a difference of several thousand euros. Tell several credit institutions your desired monthly rate, term and repayment amount and compare the remaining debt and the total costs.
What is your recommendation for the amount of equity?
Banks require 20 percent equity. This is difficult to achieve with larger properties. Land, personal contributions and savings in building society contracts are accepted as equity.
If you do without a basement and just build a floor slab, how important is a soil report? We want to build in a new residential area where surveys have already been carried out, just not on our property.
A proof of stability is required for the future house. The structural engineer who provides this proof must assume the load-bearing capacity of the soil in his calculations and will decide whether he needs a soil report with the actual values.
Should you sell funds and stocks to gain equity, or should you leave the returns as they are?
Compare costs and returns. Having a financial buffer in funds and shares is good, provided you also have enough equity. In addition, you can secure low loan interest rates with a building society savings contract, or you can save up for a building society savings contract at the same time in order to refinance the bank loan at a low cost after ten years.
Is it more cost-effective to build a larger ground floor instead of a basement?
Yes, because there is no need for complex earthworks or any external wall sealing.
A square meter of living space is more expensive than a square meter of basement…
If you build a house with, for example, 100 square meters of floor space, then the basement will also be 100 square meters. For the ancillary rooms, however, you would need a much smaller area, and that is cheaper overall.
Which houses are particularly recommendable in terms of energy efficiency?
A house with high energy efficiency can only be designed in conjunction with the entire construction – high insulation value of all components of the outer shell, avoidance of thermal bridges, arrangement and size of windows and technical equipment, heat pump, PV system, ventilation with heat recovery. It does not matter whether it is a wooden or solid house. A semi-detached house is more energy efficient than a detached single-family house because there is no cold external wall.
What is better: a lower rate with special repayments or a higher rate to get a generally lower interest rate?
A lower rate can be an advantage in order to remain flexible and to be able to react to emergencies. Special repayments are now almost always standard. A longer interest rate fixation is currently recommended, among other things to take advantage of inflation: an instalment of 1,000 euros is worth much more today than it will be in ten years, for example. Salaries usually increase, but the loan instalment does not. Lower instalments do increase the overall costs, but they ensure a better quality of life.
Should you plan to pay off the joint loan from one partner’s salary? Should you therefore choose longer-term loans?
This is a good idea when planning the future together, as it allows you to remain flexible – including when it comes to family planning. The statement “we can’t have children now because we still have to pay off the house” hurts. On the other hand, as a family, even if you could cover the loan with one salary, you can often use more funding.
What do we have to pay attention to when we buy a condominium or a house from a developer?
The purchase contract is signed before construction begins. Details cannot be viewed in advance. It is therefore all the more important that detailed construction drawings and a detailed construction description with component and product quality are or become part of the contract. The total price and construction time should be specified in the contract.
There are various subsidized loans. When does it make sense to include them and when not?
If the requirements are met, this is generally recommended. At least get a financing offer that takes subsidies into account and compare them. But remember that subsidized loans also have to be repaid and are sometimes subject to stricter conditions – such as certain building materials and energy efficiency standards. In addition to the KfW, building societies also offer subsidized financing modules that enable considerable savings over the term of the loan.
The bank has offered me a change in repayment rate. Should I accept it?
This can be useful because it allows you to remain flexible. If you have more money available, you can pay more. If your budget isn’t so tight for a limited period, you can pay less. However, there is usually a minimum repayment requirement that you cannot fall below. Make sure you get a repayment plan so that you don’t lose track.
We have a building savings contract. We could also get my parents’. Where would the building savings money be used most effectively?
A building savings contract is generally recommended, especially if the loan is already available. This also makes the conditions for bank financing more favorable. The building savings account is part of your equity. Regardless of whether you are a building saver or not, building societies grant loans of up to 50,000 euros without registering a land charge. It is advisable to speak to a financing advisor early on, even if it will still be a while before you want to start your building project.
We know that a wooden house is not exactly cheap. But where can we still save money?
There are log houses with walls made of solid wood logs with insulation on the inside. Then there are prefabricated houses in wood panel construction with prefabricated wall elements. Finally, prefabricated houses in wood frame construction, with insulation on the inside and panel cladding on both sides. Depending on the design, log houses tend to be expensive and houses in wood frame construction tend to be inexpensive. You can save money by not having a basement and choosing simple floor plans and roof shapes – without corners, bay windows, dormers, for example.
We went to a showroom for model homes. None of the houses appealed to us. When we asked about changes, we were immediately told: These are extras that cost money. Disillusioned, we then decided: We’ll build it ourselves or hire a company to build it the way we want it. What do we need to look out for?
For every house, at least the planning approval from the architect and the structural engineer is necessary. Either you look for an architect who also creates the building plan for the building application, or you find a construction company that takes care of this. Many construction companies offer turnkey houses, only very few implement individual preliminary planning. In general, however, the latter option is not cheaper. (sz)
