We rent an apartment in Frankfurt, Germany and we are contractually bound to it for another 1.5 years. We are 33 and 35 years old and there will be children soon. We make around 110k € annually (after taxes) and we have no debt.
We are thinking of buying a house on the outskirts of the city, preferably towards the south. One that we really like would cost 830k €. We don't have that kind of money. We are able to make a down-payment of around 45k € and we would need to take out a credit/loan for the balance.
House prices have risen by 35-40% in our region over the past 4 years. I wonder if we should buy the house now to avoid possibly higher prices 18 months from now and rent it to someone now.
We are rather new to the field and we have never made such an investment, not even for a car. How should we structure the loan? Could we at all?
Addition: Thanks for the answers so far. However, I would like to see a more Germany-centric opinion. It seems that in Germany you can very well pay off the house over 30 to 40 years and banks do give you such high loans. What are my best options?
Summary of the comments so far (in case a mod wants to clean up):
- Paying off houses in Germany can take 30 to 40 years and is encouraged. Banks do give these kinds of high loans. The question here for me is rather if it will backfire in anyway with our small down payment or if I did not think of other possible issues.
- We will not move further away from the city, so it has to be in the expensive urban area of Frankfurt
- We will definitely move out of the city, into a house with a lawn or trees. Even with the first child the appartment is too small already.
- Buying land and building a house would be an option if land wouldn't be ridiculously expensive or only available far out. So we have to skip on this issue.
- Only two years ago we finished our studies and could only start putting money on the side then. We first had to pay off some student loans as well and are now saving as much as we can. We are living a simple life style. We've even never had a car yet!
- We are fully aware about notary fees, taxes etc. Same goes for income cuts during parental leave etc.
- We do not have a "Bausparvertrag", but since we would like to buy rather now or at least soon, it would not be an option anyway.
- We do have Berufsunfaehigkeitsversicherung (~ insurance when being unable to work)
- We would rent the house to a company that can house temporary employees and their families in the house until we will use it by ourselves. There is a big market for this in Frankfurt since there are many big banks etc. Renting to a private person should be fine, too (confine rental agreement to 2 years etc).