With the image of the dream house clearly in mind, at some point the question arises: Can I really afford it?? Our budget calculator gives you information.
How much money is available per month?
You probably already know what you want your future home to look like, or? How many rooms it will have, how big the garden will be and what color the wallpaper in the fireplace room will be. Perhaps one of our advertisements has attracted your attention to a property that you like at first sight and that comes very, very close to your expectations. Even if you already have some equity saved up and are familiar with financing and repayment options, you need to ask yourself how much house you can actually afford to buy. To figure this out, you will need a pen, paper and a calculator. If you are fit with the a spreadsheet program like Excel, you can also start there to list your monthly expenses. Be sure to take some time to get a detailed overview of the property. With a superficial, quick cash check you run the risk of overlooking hidden items.
In the list you list all items per month, starting with the rent. You can also remove this item from your expense list later, as this payment would be freed up when you move into your own home to pay off the loan.
The easiest way is to calculate a sample month and orientate yourself on one of the last months. To keep track of your expenses, it is best to divide them into categories:
- Food and household
- Netflix etc.
- Mobile radio
- Fuel costs
- Car tax
- Car insurance
Many insurances and for example also the car tax are usually calculated annually. Divide the amount by 12 to calculate each month’s expense. This is the best way to handle larger expenses, such as your summer vacation.
If you break down your costs in the month for the first time, it can already cause a small shock. Subtract this amount from your monthly net income to find out how much money you have at your disposal each month. If the result ends in the minus, you probably live beyond your means. If the amount is positive, but not as high as you had hoped, you can of course still save something. By the way, the greatest savings potentials are offered by vacations and the car. When you are cutting back, please remember that a warm meal is just as much a part of life as a visit to the cinema or even a vacation. The only question is whether it has to be a long-distance trip every year, or whether every evening has to end at the Italian restaurant around the corner. Also keep in mind that you commit yourself with a construction financing for several decades. To live for 20 years only on noodles with ketchup, in order to live in your own house, should not be the goal.
Caution: do not plan on future salary increases, an inheritance or even a lottery win. Always start from what you currently have at your disposal. If you are counting on a salary increase, continue planning when the salary actually lands in your account.
This is how much house you can afford
There is a simple rule of thumb to estimate how high your loan can be at most. First, add your current rent to your disposable income. This is the amount YOU would save per month if you lived in your own home. The rule of thumb is:
((Mtl. Savings amount x 12) / (interest + repayment)) x 100 = maximum loan amount
We will briefly calculate this using an example. Assumed you could put aside 500 euro in the month and would also 500 euro rent save. In the month that would be 1.000 Euro, in the year 12.000 euros. With an annuity loan, for example, you would have a fixed interest rate of 2.5 percent and a repayment of 1.5 percent. According to the rule of thumb:
You would therefore probably have a maximum loan of 300.be granted 000 euros. In an appointment with the bank of your confidence your advisor can tell you the exact amount.
Tip: You may have to pay rent at the beginning and at the same time pay off the first installments for the loan. Therefore, try to plan the move accurately, but keep a reserve in case of scheduling problems or delays.
The service charge trap
Third parties would also like to earn money from your property. For example the notary and also the tax office. In Germany, the purchase contract for a property must be processed through a notary, otherwise the contract is not legally binding. The entry in the land register also runs through the notary public. On average, you should allow for 1.5 percent of the purchase price. In addition, the tax office also holds out its hand and requires a percentage of the purchase price, depending on the federal state Real estate transfer tax. In Hamburg, the real estate transfer tax is 4.5 percent. If you want to finance your own home without equity, you must take these additional costs into account. For a loan of 300.000 Euro, it is about the thumb 15.000 euros due to notary and tax office. Your dream property must therefore not exceed 285.000 Euro costs. Brokers also receive a share for the services they provide – unless otherwise agreed.
By the way, you can easily calculate the additional costs in our financial calculator: