House hunting part 2/2 - Finances

(Warning: This post contains references to fishes and vegetables, which probably doesn't make sense in English)

In a previous post (which you can find here) you can read about our family's desire to find alternative accommodation. There you can read a little about what we dream about, expectations and hopes about what we can find.

Both me and my partner both have stable jobs. Even if they are not a CEO salary directly, they are still respectable and pay better than sitting behind the cash register at ICA. Money is also under the mattress from previous apartment ownership in Svea rike, so investment is also there. So, piss-poor range aside (again, read here) what's really holding us back? After all, the market has hit prices down here in Germany as well. The interest rate pushes prices down, energy prices follow close behind. So just to buy?

Comparison of house purchase costs

To begin with, there are some differences in the description of the purchase between house purchases in Sweden and Germany. I think I'll list them and give a calculation example of a house in the Swedish equivalent of about 4 thousand.

Sweden

In Sweden, we have two extra costs that are hidden and you might not think about them the first time you buy a house - Mortgage and title deed.

Pantbrev - Mortgage deed

A mortgage deed is more or less a receipt that you pledge something and gives the lender (i.e. usually the bank) the right to take possession of what you then pledged. In this case, the house and the property. It is calculated on what you borrow and not what you buy for. If you pay everything in cash, you do not pay for a mortgage, because you do not create a mortgage.

The fee is 2% of the mortgage deed's amount, as well as a fee of SEK 375.

Lagfart - Title deed

Lagfart Title deed" is proof that you are the owner of a property. When a property is bought or sold, the new owner must apply for title deed to the Land Survey, In order to be granted title deed, all possible debts and loans on the property must be paid off or resolved, and the application for title deed must be complete and correctly filled in, etc. So someone has to administer this and wants to be paid for it.

Legal title is 1.5% of the assessed value (which must correspond to 75% of the probable market value for properties in the value area, two years before the assessment year 😫) + administration fee of SEK 825.

If we pretend that you can borrow for the full value of the home (to make it simple) and you thus lend 4 million to a home without a single mortgage deed to its name, with an appraised value on the same (again, to make it simple ) becomes the cost.

Legal speed: 0.015x4,000,000+825 = SEK 60,825

Mortgage deed: 0.02x4,000,000+375 = SEK 80,375

Total: SEK 141,200

Oh yes.. plus the house itself of course.

Germany

So what do we have to compare with in Germanica if we drive with the same house? There we have 4 costs to consider.

• Grundbucheintrag  - Property register entry
  This then includes registration in the German property register, which is called the "Grundbuch". The registration means that the ownership of a property and any rights and encumbrances attached to the property, e.g. lien, easement or usufruct, officially documented. A Grundbuche entry is necessary to establish ownership of the property and to ensure that all parties concerned have rights and obligations that are properly documented.
  Grundbuche entry costs: 0.5% = €1,995
  
  
• Notarkosten  - Notary fees
  The cost of a notary's services in a real estate transaction. In Germany, it is necessary to hire a notary when buying and selling real estate, to ensure that all documentation and contracts meet the legal requirements.
  The notary fee is (usually) 1.5% = €5,985

• Grunderwerbsteuer - Property transfer tax
  Property tax paid to the local authority and calculated as a percentage of the property's selling price.
  The rate varies depending on where in Germany the property is located, can start at 3.5% but is usually 6.5% = €25,935

• Maklerprovision  - Broker's commission
  In the past, it was common that - just like in Sweden - the seller paid the entire brokerage commission. But since 2020, it has become more common for the buyer to also share in the brokerage commission. This means that both the buyer and the seller pay a certain percentage of the brokerage commission. This is generally split 50/50 between seller and buyer.
  Usual price for the buyer is then 3.57% = €14,244

If we add up all these nice percentages, we will land on 12.07% of the purchase cost in additional fees for a house purchase.

If we buy a house for €400,000, we will therefore have to shell out a total of €48,140 extra.

If we then compare Sweden and Germany, Germany ends up with almost 300%(!!!) more in fees for a house purchase, provided that the Swedish house was completely without mortgage, otherwise it is more.

In addition to that, like the Swedish example, we also have to pay for the house itself, of course.

Let's compare a bit and throw lots of numbers into the sentences to confuse those with Dyscalculia...

In Sweden, you can borrow up to 85% of the property's value. If you have SEK 750,000 available for the house purchase, you then land on a house value of 4 thousand in round turns. 600 potatoes in loans and 141 onions in extra fees. Throw in some moving boxes, moving tape, moving pizza and moving beer - and I'd like to claim that we end up with 750,000 riksdaler.

I would argue that in Sweden you get a pretty OK shelter for 4 thousand. Of course, it all depends on where you live and if you aim to live next to Slussen in Fjollträsk, then maybe it won't be more than a Harry Potter scrub. If you don't mind 5 miles to the nearest neighbor, you can buy yourself a whole village in Norrland.

In Germany, you can borrow up to 90% of the property's value. If we run a little reverse calculation from above and take our SEK 750,000, convert to EURO in a magic machine that gets it to SEK 10 = €1 without currency conversion surcharge, we thus have €75,000 to shop for. If we aim for this house of 400 fat European salmon, we have lost almost 50 of the fourrs along the way and we only have 25,000 goldfish to put on the house. This makes us 15 perches short, which must be borrowed via blank loans or similar from some other loan shark. (I tried to get a file reference in here, but I screwed up)

Torsk på Tallin for those who didn't take the reference

In Germany, they usually say that you buy the house for life. I can understand that when you have to sell your first born son, just to buy the house! There is absolutely no room to change after that. If we feel that the accommodation was too small and have to change, it will cost me at least 50 more fish sticks, just to change. If we change down in size because one might break up with a partner or the children have flown out, maybe we can get away cheaper with 30-40 fish balls?

How does this promote a vibrant housing market?