Mortgage affordability: How to secure your dream home long-term

Buying your own home is one of life's biggest investments. Buyers contribute a portion of the purchase price as equity from savings or retirement provision. The difference between this and the purchase price is financed by a loan, which is referred to as a mortgage. It makes the dream of home ownership possible – but it is also a long-term commitment. The question of whether the loan can be financed is where affordability comes into play. 

Banks and insurance companies generally finance a maximum of 80% of the purchase price when you buy a property. This loan is divided into two parts: The first mortgage up to around 65% , which remains in place permanently and the second mortgage for the amount up to 80% . The latter must be repaid within 15 years or by retirement at the latest.

Before a loan is granted, the affordability of the mortgage is checked – i.e. whether your income can reliably cover the expected costs. These include the mortgage rate, repayment of the mortgage (amortization) and ancillary costs for maintenance and operation.

Affordability is usually checked when buying a property. But life is rarely straightforward. Income and expenses change over the years. Someone who can easily afford their mortgage today may reach their limits tomorrow due to a change in their situation. Starting a family, reducing your workload, changing jobs, divorce or retirement can change your personal financial situation. 

It is therefore worth considering affordability not as a one-time figure, but as something to be reviewed regularly. This ensures that your home remains affordable in new phases of your life.

In addition to foreseeable changes, there are also unplanned events – such as an illness, an accident or the death of a partner. In such situations, income falls, but the mortgage remains. Without insurance, this can become a burden for the surviving dependents.

One topic that is often underestimated is affordability in old age. Many households experience a significant drop in income when they retire. What was easily affordable during working years can suddenly become tight in retirement.

This makes it all the more important to provide for retirement early. Partial amortization before retirement reduces fixed costs. The third pillar can also be used in a targeted manner to make repayments or close income gaps. If you plan in good time, you can ensure that you will be able to keep your home in old age and not have to sell it.

Your house is more than just a property – it is the center of your life, your home. To keep it that way, it is not enough to check affordability at the time of purchase. This evolves as your life does. Individual advice can help you find the best possible financing solution.