MedEwok wrote:
I must be looking at the wrong loans then because we estimate we cannot take out more than 500k from the bank. Especially if we follow the classic advice of having 20 – 30% of the total house price already available as “own capital”.
Have you actually asked a bank? A dual physician couple should easily be able to raise at least a million w/o any downside on the interest rates these days.
20-30% as pre existing assets going into the house is the “old German thinking” that is a) coming from times where the interest rates were north of 5% and b) increases in house value were not taken into consideration (and yes, being German myself one could always argue that these last 40 years of continuously increasing real estate values have only been a statistical artifact and beginning tomorrow we won’t see any more value gains ;-) Only thing I can tell is that buying my house has been the best asset allocation decision I’ve done so far in my life…).
Realistically and still quite conservatively I’d argue that it is fine if one can pay the real estate agent (if one uses one) and the real estate acquisition tax from existing capital (that should add up to about 10% of house value) and can finance the full actual purchase price.
But obviously everyone has to make their own decision.
Graham wrote:
I’m not sure the incomers kill the communities. Market forces apply anywhere.
If incomers are actually incomers, I also don’t think they would.
What we see in some parts of Germany, however, is that people are buying houses in rural villages but don’t really plan to live there but use it more as weekend homes. And that obviously kills communities as the effective population of the villages is actually shrinking.
That effect is most extreme close to the Swiss border where significant parts of whole villages are bought up by Swiss but also e.g. on some islands in the North Sea where villagers can no longer effort to live there…
Malibuflyer wrote:
Have you actually asked a bank? A dual physician couple should easily be able to raise at least a million w/o any downside on the interest rates these days.
Not yet, because we haven’t found any suitable houses yet, but you are certainly right that we should. I also agree that the old “rules” for preexisting assets are very Conservative, not made for the current low-interest situation.
Our incomes are also pretty much assured, as there is no way we will both end up without a job in the next decades. A fully competent robot physician is some way off yet…
MedEwok wrote:
Not yet, because we haven’t found any suitable houses yet, but you are certainly right that we should. I also agree that the old “rules” for preexisting assets are very Conservative, not made for the current low-interest situation.Our incomes are also pretty much assured, as there is no way we will both end up without a job in the next decades. A fully competent robot physician is some way off yet…
Yes do talk to the bank, put the figures on the table and see what kind of budget that gives you for the house. I made the mistake years ago to assume they were only going to finance me a given percentage and missed a one in a lifetime deal due to that, as I later learnt they would have easily financed that place but assumed they would not because we did not have 20% in capital.
Here you can mortgage the whole price of the house, plus the tax and fees (about 10% of the purchase). No need to bring money, or very little. But banks are more strict on the income vs dues rate.
w/o any downside on the interest rates these days
This reminds me of Bertrand Russell on the farmer and the chicken, and that ‘a more sophisticated view on the uniformity of nature might have been useful to the chicken.’
Fiat money creation/printing may be accompanied by low level interest rates where a. there is a high national savings rate and trust in the national currency and b. Secular deflationary conditions. Japan and the yen being a poster child of this condition.
The rest of the world is not Japanese! and certainly not with respect to national savings surpluses.
Jujupilote wrote:
Here you can mortgage the whole price of the house, plus the tax and fees (about 10% of the purchase). No need to bring money, or very little. But banks are more strict on the income vs dues rate.
French banks always seem to think they are doing you a HUGE favour by giving you an account, let alone a mortgage. Are German banks the same? I remember on both the occasions I needed a mortgage here they all seemed incredulous that I was shopping around for the best deal for me, and was proposing they might like to alter their terms or rate etc if they wanted my business – its like they didnt understand I can actually do maths myself. A couple were outright hostile when they realized I was serious about my suggestions when comparing their terms with the terms of another lender – The differences between offerings added up to many thousands of Euros.
@MedEwok : Dont just go to one bank or just your own bank, go to several, and do it before you see a house you want. You will be giving the bank that gives you a mortgage tens of thousands of Euros and they want your money. A mortgage is a purchase by you in exactly the same way as you would buy a car and the bank will take your house off of you without any remorse should you not pay them back.
Regards, SD..skydriller wrote:
Dont just go to one bank or just your own bank, go to several, and do it before you see a house you want.
Very sound advice.
Lesson learnt from my own first (and only so far) purchase was that it is imperative that you have a sound plan in hand before even looking at adds. That means as skydriller sais: go to various banks and spread out your possibilities and determine what budget you actually have. Also take into account that renovations may be included in that. Get to the point where you can trigger a mortage with people you already know, who know you and who will give a go ahead quite fast when needed.
In Switzerland it is also very advisable to talk to your pension funds. Many of them give out favoable mortage conditions to their membership. I’ve been with the pension fund of my previous employer ever since I bought my house and the conditions are still better than if I took the money from a bank. Not all will allow however to stay with them if you change employment, some do.
my mistake at the time was that I made the calcs myself based on the general rules regarding mortages, only to find out that the organisation I finally got my mortage from would have been willing to finance much more than I was expecting. As a result, i passed on a “once in a lifetime” opportunity because I thought I was missing money. I certainly would not make that mistake ever again.
Thank you all for your advice!
