How young people can afford a property

There is no age limit to the desire to own property. Even young adults dream of a condominium in the city or a house with a garden, but are put off by the thought of financing. But it can work if you take a few points into account when building up your assets.

It’s obvious that presents from grandma and savings painstakingly taken from pocket money are not enough to finance a property. Young property investors therefore need one thing above all: a little patience. This pays off, as banks only offer good conditions for financing a property if you have 20 to 30 per cent equity.

Saving – when to start?

The question of when you should start saving as a young person who wants to buy a property is quickly answered: as early as possible. If you want to invest in your own home in your mid-30s, you should start putting something aside every month about ten years beforehand. Let’s assume you want a 60-square-metre flat in Berlin, which currently costs around EUR 237,840 (as of summer 2024). Plus 10 per cent service charges. Around 52,300 euros are therefore required for the recommended equity of at least 20 per cent. If you add a net interest rate of two per cent, around 445 euros a month will have to go into the piggy bank.

Building up equity – how does it work?

But not everyone can deduct such a sum from their salary every month. But you shouldn’t let this put you off, because even lower contributions are worthwhile in the long term. If you’re lucky, you can benefit from gifts or early inheritance. ETF savings plans are also a good way to build up equity. It is best to have all your questions answered by an independent financial advisor. We will be happy to put you in touch with an expert in your area.

Building society savings or call money account – where to put the money?

Regardless of where the money comes from, the question remains how to save it. Building society savings contracts are only suitable for building up equity to a limited extent. There is hardly any interest on credit balances, which means that losses tend to be incurred during the savings phase. It is currently more worthwhile to invest in call money and fixed-term deposits. A financial expert can also advise you on this.

If you already have enough equity to buy, you should finance the rest of the purchase sum with a classic mortgage loan. Take a look at the effective annual interest rate, which shows the actual credit burden.

Return on investment – is it worth it?

Young people thinking of buying and then renting out can benefit from the rise in rents. This means higher returns for investors. As you are not buying for your own home, but for the return, you should concentrate on buying flats that are easy to let in urban areas.

Are you looking to buy a property for yourself or as an investment and have questions about financing? Get in touch with us! We are happy to help you.

Note

For reasons of better readability, the generic masculine is used in this text. Female and other gender identities are explicitly included where 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 individual case.

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