Comment by sdevonoes | Hacker News Reader

Comment by sdevonoes | Hacker News Reader

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Let's do some simple (and probably wrong, but hey) maths:

- House price: 450K euro

- In Europe you usually need around 30% of the house in cash (20% for down payment and 10% for paperwork and the like). This means you need 135K euro saved. Saving 18K euro/year => you need to save money for 7 years

- Now you get a mortage for the 70% of the 450K euro (315K euro). Now depending on how much you want to pay every month, we get different outcomes. Let's say you are willing to pay 1500 euro/month of mortage: this means (roughly) you will be paying your house for around 17 years

- This all implies you will be earning 60K euro (or more) per year over the next 24 years of your life. Let's say you are at this moment 25 years old, so you'll get your house paid when you are 50.

This is the panorama for people who are supposed to be the top 10% tier in the society (in terms of gross income) in a country like Germany (but applies to any other western European country as well). Not bad, but not good either.

> top 10% tier in the society (in terms of gross income)

According to this statistic[0], that should be 39.1% (numbers are for net income, but top two brackets should fit 60k gross income). In a household with two working people that both have semi-decent jobs you'll have that (and with tech job + basically any other job, you'll beat that).

> Let's say you are at this moment 25 years old, so you'll get your house paid when you are 50.

Yes, that sounds about right, and from what I can gather isn't too different from how it worked in my parents generation. What do you expect? That you can pay off a house in 10 years?

[0]: https://www.bpb.de/nachschlagen/zahlen-und-fakten/soziale-si...

my grandparents both were classical workers (so apprenticeship for men, nothing for women) and bought their houses, paid off 'til their 50ies (middle income bracket I guess). My parents were academics (probably upper third income bracket), paid off their house 'til their 50ies (my mother converted to housewife after buying the house!). Now, if I were to buy the house my parents live in, I'd have to pay around ~1.5M€ I guess. Not sure how I should do that (with a partner and kids) 'til 50, even being a tad higher in income than my parents.

That being said: after the war, housing was destroyed and had to be rebuilt, nowadays it's there already (and more than enough if I look at my family and others around us). The only problem is that now one doesn't need the lower third of incomes to build it and so it has become a playground for financialization games which basically make sure that wealth will steadily be reallocated one family with too many kids at a time...

Thats wrong. At least right now.

10% down payment is quite common currently in Germany for a house.

Well the money still needs to be paid at some point. If you go the 10% deposit route, you will get slightly worse interest rates and overall higher monthly payments. Payments that you need to maintain for ~20 years…

The 10% is what is currently often done because it barely moves the interest rates.

The interest rates are just so low that waiting to get a loan and buy a house is mostly money lost by not getting that stupidly low interest loan.

10% is the absolute minimum and doesn't buy you anything of the house, it just covers the legal and realtor fees.

That is mad. On a 500,000 EUR house, 50,000 EUR goes to realtors and lawyers?! What on earth are they doing for that kind of money? Is that including some large tax?

In the UK, you wouldn’t pay more than a few thousand for a lawyer and associated conveyancing fees, and the vendor pays the realtor (usually in the range of 0.5-1.5% I believe).

We do have stamp duty (tax) which can be substantial eg 15,000 on a 500,000 property.

I moved to Germany a few years back (was born and raised in the UK). When I saw the 4%+ just to the realtors... I was pretty shocked.

I swore to my wife that I'm not paying almost 20K to the person giving me a tour of a house.

Seems like selling houses might be a better job than software.

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