2023-08-10 13:55:21
Vienna. The cost of a 3-room apartment with elevator on the fifth floor in Graz is approximately 250 thousand Euros, but you need to pay for side costs, loan interest, etc. If you include it, it starts to burn your pockets a little. In some cases, the cost can even almost double.
According to the calculation made by the „Krone“ newspaper on a sample, “Owning a home is no longer possible for almost 90 percent of people.” Construction costs are 30% higher than three years ago and loan interest rates have increased from 0% to 4% to 5%.
In Krone’s example, the price of 250 thousand Euros for an 85 square meter 3-room apartment located in Graz may be suitable for everyone at first. Although it seems possible to own this house with a quick calculation, unfortunately the cost of the house can sometimes go up to 470 thousand Euros, depending on the type of financing.
Accordingly, it seems possible and appropriate to buy this house in the following scenario in the first place: Male, 30 years old, working with a monthly income of 2,500 Euros (called the median income in Austria). The woman is 29 years old, is on maternity leave with her first child and receives maternity benefit of 1,050 Euros. There is a car at home, no debt. It looks like it can be done.
Unfortunately, the cost can go up to 470 thousand Euros.
In fact, the truth of the matter is not like that at all. Because 250 thousand Euros never stays as 250 thousand Euros, it can go up to 470 thousand Euros depending on the type of financing.
The situation develops as follows: When buying a property, there are always additional costs, from broker fees to title deed transfer tax, fees for entry into the land registry and preparation of the purchase contract. Financial experts recommend adding about ten percent to the purchase price. In the concrete example, the brokerage fee reported as three percent means an additional cost of 28 thousand Euros.
In this case, it is 278 thousand Euros that our young family has to finance. To do this, they first need money. Strict financing rules have been in force since 2022: 20 percent of the capital must be own funds, the loan can have a maximum term of 35 years and the installment cannot exceed 40 percent of the monthly net income. In the case of a family with a joint income of 3,550 euros, this will be an installment of at most 1,420 euros, with 20 percent corresponding to almost 56 thousand euros. Austrians save an average of 300 euros per month (note: even before record inflation and energy prices peak). The best-case scenario for two savers is that it takes almost nine years to have enough cash to meet credit guidelines.
Loan rates are high and conditions are very strict!
Fortunately, our couple has parents who can help. They have 222,000 Euros left to borrow from the bank. And now things get really expensive: First of all, you need to borrow 233 thousand euros to pay off 222 thousand euros. Banking, transaction fees, account management, lien registration, etc. It costs 11 thousand Euros. You will have to repay the money over a 30-year period. But okay, over a 30-year term, it’s an installment of just over 1,100 euros, depending on the type of interest (fixed or variable). It is clearly below the 40 percent limit mentioned above.
So we went up to 289 thousand Euros for an apartment that was originally estimated at 250 thousand Euros. A big increase – but a far cry from the announced €470,000. Where does this money come from? Today, everyone who gets a loan pays more than four percent interest. Calculated over 30 years, this means that a €233,000 loan will result in a cost of between €400,000 (variable interest rate) and €412,000 (fixed interest rate). It is also worth noting that in the case of the floating variant, this only applies if interest rates do not rise further. Plus equity – making the property twice as expensive as the original offer. This seems unlikely to be met. (yenivatan.at)
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