Buying property: What credit rates can we afford?

Lucia Neuroth and Frederik Oberbeck, both in their late thirties and living together in a rented apartment, are actively searching for their dream home. The couple, who have chosen to use pseudonyms, aim to move into their own house as the first step toward securing a more stable future. Their second goal is to prepare for potential parenthood, which has led them to consider the need for additional space—specifically, a children's room. While they are hopeful about starting a family, they acknowledge that this remains uncertain. Regardless, they are already planning ahead, including financial considerations that will shape their decision-making process.

The couple’s journey involves a significant financial commitment. Typically, when purchasing property, buyers contribute around 20 percent of the purchase price plus additional costs such as taxes and fees. This portion must come from personal savings, while the remaining amount is financed through a mortgage. Neuroth and Oberbeck have been saving diligently over the years, accumulating €230,000 in savings. They had initially planned for a budget of up to €500,000 but found that housing prices in the regions between Cologne and Frankfurt are higher than anticipated, pushing their target range to between €600,000 and €700,000. To cover the down payment, they sold their shares in stocks recently, citing concerns over market volatility as a risk factor. “We are very security-conscious,” Oberbeck explains, emphasizing that they want to avoid situations where a sudden drop in stock value could jeopardize their ability to buy a home.

Their current financial situation appears stable. Oberbeck earns €110,000 annually working in a logistics company in a leadership role, while Neuroth earns €75,000. Together, they have approximately €8,500 per month available after taxes. As they are not married, each is taxed separately. Their monthly expenses total around €3,800, covering essentials such as food, clothing, hobbies, subscriptions, insurance, and even vacations. Rent is currently low at €900 per month, allowing them to save the remainder of their income. Previously, they had to finance a car, but they now drive a company vehicle instead, reducing their monthly obligations.

Despite their strong financial standing, the couple remains unsure about how much of a monthly mortgage payment they can afford. This uncertainty affects their ability to decide on the length of the loan term or whether they might need to increase their down payment to secure a lower interest rate. To help clarify these questions, they are consulting with Fabian Frey, a financial advisor from VZ Vermögenszentrum. Frey will assess their income and expenses to provide guidance on what kind of mortgage payment would be sustainable for them.

Oberbeck notes that if both of them continue working full-time, the monthly mortgage payment should not pose a problem. However, the couple is aware that life circumstances can change, and they want to ensure their financial plan is robust enough to handle unexpected challenges. Their approach reflects a careful balance between ambition and prudence, aiming to make a long-term investment without compromising their stability.

As they navigate the complexities of homeownership, the couple is considering multiple factors, including location, size, and affordability. Their search is ongoing, and they remain optimistic about finding a suitable property within their budget. With the support of their financial advisor, they hope to finalize their plans soon and take the next step toward building a shared future.