
Is it realistic to buy a property with a net income of €3,000?
When the bank turns down a loan, the dream of owning your own home often shatters faster than you would have hoped. Many people are suddenly faced with the question of what is actually possible with a monthly net income of around $3,000. But the desire for a home of one's own remains—and drives many to continue searching for ways to make their dream come true.
How much property can you buy with a net income of $3,000?
Experts recommend that the monthly mortgage payment should not exceed 40 percent of your net income. However, some banks set even stricter limits and often only grant loans for up to 30 percent of monthly income. Let's imagine this scenario: if you want to finance a property over 25 years with a monthly payment of $873, have 20 percent equity and face an interest rate of 2.5 percent, you can only afford a property worth a maximum of $210,000. The scope for realizing the dream of owning your own home is therefore often narrower than hoped for.
Additional costs when buying real estate: What to budget for in addition to the purchase price
In addition to the purchase price of a property, there are other considerable costs to consider: notary fees, land transfer tax, estate agent's commission, and fees for registering the property in the land register. Depending on the state, these additional costs can amount to around 10 to 15 percent of the purchase price. On top of this, there is the interest on the mortgage, which also needs to be factored in. For a property worth around $200,000, this means that around $20,000 should be budgeted for these additional costs alone – and this amount usually has to come from your own funds.
What interest rates can I expect?
The amount of equity not only affects the purchase price of the property, but also determines the amount of the loan that ultimately has to be taken out. Financial experts recommend covering at least 20 percent of the purchase price from your own savings. In addition, the current interest rate plays a decisive role: for a loan term of ten years, this is currently around 3.5 percent. It should be noted that interest rates may vary depending on the loan amount and the proportion of equity capital.
What else do I need to consider?
Include potential renovation costs and possible loss of income due to illness, unemployment, or parental leave in your planning. These factors should be taken into account in your financial calculations. It is advisable to choose a moderate monthly installment to allow sufficient leeway for building up financial reserves. Note: The information provided here on real estate financing is for guidance only and is not binding. On request, we will be happy to refer you to an experienced financial advisor from our network who can provide you with comprehensive and individual advice.
Are you looking to buy a property and want to know what you can afford? Contact us, we will be happy to advise you!
Notes
For reasons of better readability, the generic masculine form is used in this text. Female and other gender identities are expressly included insofar as this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific case.
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