Approved

We received post from the bank today to confirm the mortgage is approved so now we are all set to get started.  They confirmed it is a 15 year fixed rate of 1.75%, which is pretty good I'd say and now we have it in black and white I actually believe it!

The next step is to make an appointment with the notary together with the Volksbank who are selling the land  to have this signed over to us.

We also received a welcome pack from Allkauf yesterday with a step-by-step guide to the building process and outlining who should be doing what and when.  It's very easy to understand and really helpful so we are feeling confident that everything is on track and under control.

Finance update

Yesterday we had our second appointment with Volksbank.  Although we had already signed with the independent advisor we wanted to hear what the Volksbank had to say as in theory we could still cancel the other contract with the 2 week grace period on all contracts here in Germany.

Herr V. at Volksbank had come up with a couple of options for us, the first being that we sell the flat and then take out three loans and a Bausparvertrag meaning we will pay only slightly less than the Sparda Bank offer.  His second option was to keep the flat, buy the land only and not the house, wait 3 years until our current Sparda mortgage is due for refinancing and then decide if we should sell the flat and build the house.  This was his recommendation as he thinks it will give us time to decide if we really want to go through with our plan to build.

This was quite a surprise! Having the banks mortgage advisor, who we had only spent two hours of our lives with, making life decisions for us and assuming we may not actually really know what's good for us or what we want was not what we expected.  And although Herr V. was very friendly he lost us at this point and made us feel even more strongly that we had made the right decision.

In future I would go straight to an independent advisor.  From Steffi's time as a financial advisor we know that there is a very attractive commission attached to opening a Bausparvertrag and I'm not entirely sure if the banks had our interests at heart.

Land

One of the first things we did after the initial consultation with Allkauf was to start looking for land. We knew we wanted to move south to a village or small town within 1h driving to Stuttgart and my office and we were told there is land available in several location south of the A8 autobahn towards the northern Black Forest.

We looked at several village websites and on www.immobilienscout24.de for available land and there was actually quite a few options.  Last week we did a driving tour around the various villages and it became clear that the further away from Stuttgart the cheaper the land and more picturesque the surrounding so finding the ideal location would be a balancing act between distance, price and scenery.

Calw had a lot of nice plots and we found a couple that we really liked but driving to work would be right on the 1h limit so we kept looking and after scouting out several options we came across Lehningen, part of the village of Tiefenbronn.  It is about 35 - 40m drive from my office and 20m from Steffi's.  It is up on a hill with great views and a completely new building area where multiple plots are being sold so planning permission is already granted.  After looking around the location we have decided it is ideal and it is now reserved for us and as soon as we have the financing sorted it's ours!

Here are some photos:

https://plus.google.com/u/0/+BenCollierspage/posts/p/pub has a link to a panorama photo

Financing

Obviously one of the most important aspects is financing the build.  We own our current flat and still have a mortgage on it to pay off, financed by Sparda Bank.  It is at a fixed rate until June 2018 at which point we have to refinance it.  To do this we also have a buildings savings account (Bausparvertrag) where we pay in monthly to build up capital and then at the time the mortgage needs refinancing we can use the capital to secure a loan at the rate we fixed in 2008 when we signed the contract.  At the time this seemed like a good idea but there are two main issues with this:

1. We secured a rate of about 4% which seemed low at the time but now rates as low as 1.5%
2. The whole Bausparvertrag is locked in to the mortgage by Sparda Bank meaning it is seen by them as a security on the current mortgage so we can't actually access the money in it without them allowing us to do so.

Our plan is that we keep the flat and rent it out meaning we cover the cost of the payments on the flat with the rental income.  This, however leaves us with the issue of how to use the fairly substantial savings in the locked Bausparvertrag as capital towards the mortgage to push down the interest rates.

Our first appointment was with Sparda-Bank, who financed our flat.  We asked about wrapping both the flat and the house in to one new mortgage so we can release the locked funds.  His response was surprising as he basically said there was no chance of getting out of our mortgage or the locked Bausparvertrag unless we sell the flat and then pay a fee of €17,000 for their lost interest!  He then worked out that if we sell the flat we could finance the house with a new mortgage for around a monthly payment way up in the upper limit of what we want to pay.  We were also surprised that he added in multiple insurances including life and unemployment although we told him we have these already (they totalled over €30,000).  We left Sparda Bank feeling pretty deflated.

The same evening we had an appointment with an independent financial advisor recommended to us by Allkauf.  We told him what we wanted to achieve and he sat with us for over two hours working out the options.  He said we can get to the money in the Bausparvertrag if we can show Sparda that we have taken out a new loan to cover the flat mortgage due in 2018.  We can already sign for this with the current low interest rate meaning the bank has it's security and no longer needs the Bausarvertrag, thus releasing it to us.  We would still have to pay the €17,000 fee however but he also worked out that with the lower interest rate we could actually save more than this so it ended up cancelling itself out.  Total cost for financing the flat and the house would again be at our upper limit per month but we would get about €800 income from rent so the actual monthly cost will be well below our limit and only slightly more than we pay now for the flat.  All the finance would be through ING DiBa bank.  Much better!

Our final financing appointment was with the Volksbank in the village we are moving to.  They are selling the land so wanted to see if they could also help us finance it.  They were very friendly but also said we would have to sell the flat as Sparda wouldn't let us out of the contract.  Even when we told them how the independent advisor had recommended us to do this he still didn't see it being possible, so our mind is made up and we will go with the offer from the independent advisor.

We have now signed the contract and just have to email it to our advisor and he will do the rest.  Hopefully he is right about us getting out of the Bausparvertrag as the whole build is now relying on this being possible.  It will be a nervous few days until all is confirmed.

Buy or Build

For a few years we have been thinking about moving from our 2 bedroom flat in Stuttgart Rohracker to a more rural area and now we have a new family member on the way and our nesting instinct has really kicked in we are going for it.

After much looking online at houses to buy and being frustrated by the lack of anything in our price range that wouldn't need a huge amount of work we decided a couple of weeks ago to look at the cost of a new build.  In Fellbach just north of Stuttgart there is a field full of show houses from the various building companies.  Here you can go in to each, look at the size, layout, fittings, etc and chat to their sales reps.  We spent a few hours there talking to various different companies and were surprised that for less than buying we could actually build our own house!

The two we narrowed down to were from Allkauf and Fingerhuthaus, they were very similar in style and both were very helpful and forthcoming (unlike many of the reps in other houses that seemed uninterested in actually selling a house).

Allkauf gave us an offer and a follow-up appointment the following Wednesday while Fingerhuthaus gave us a rough estimate and a follow-up appointment the following weekend, although their offer was over €70,000 more for less house and less accessories (garage, bathroom suite, etc.) and when the "senior" salesman joined in the discussion he spent most of the time telling us why we shouldn't go with other companies rather than why we should go with his which we really didn't like.

We spent the time until Wednesday looking at all the options we had seen and working out the finances (Steffi worked in the financial planning for years so knows her stuff) and came to the conclusion that the house from Allkauf would be the best option and if the price quoted was real (including as many hidden costs as we could think of) then we would go with them.

The way it works here is that we have to find and buy our own piece of land to build the house on so once we sign for the house we then have the offer fixed for 15 months giving us time to find land, if we don't find the land within 15 months we would lose the offer on the house, although at no cost so still no risk at this point.  Only once we buy land are we required to then build the house we signed for.

On Wednesday we returned to the Allkauf show home and had a long appointment with the sales rep (we were now on "du" terms).  He and his wife added in all the extras we wanted, the price was what we expected so we signed!  After hand shaking, hugging, and being presented with a bottle of Champagne and more jelly babies we could eat in a week we left feeling very good about the whole thing.  Now the real work starts!

Here are some photos of the show house.  It is not quite the same as we ordered but it gives an idea of the style.

And the initial floor plans: