Bridge financing / variable loan

Thanks in advance for the answers. Does it make sense, given the unclear timeline, to first take out a loan for the remaining amount for the land purchase? Or would you tackle the entire financing right away?

How exactly does the whole process work in the first case?

You currently can't tackle the entire financing at all. You neither have a price for your project nor do you know the selling price of your apartment. Therefore, the credit framework is completely unclear.

I would finance the remaining amount for the land purchase with a variable loan WITHOUT registering a land charge, so that you remain completely flexible. If you then want to start the construction, you have free rein in choosing the bank and the amount of the loan.

I would finance the remaining amount for the land purchase variably WITHOUT registering a land charge, so that you remain completely flexible. If you then want to start the construction, you have free choice of the bank and the loan amount.

That’s roughly how I had imagined it as well. Without registering a land charge, the interest rate is probably higher, right? Would it make sense to take the amount on the existing land charge of the apartment? Is that even possible? What interest rates are we looking at roughly for this loan amount and variable loan?

The loan will then be repaid as part of the complete financing, right? Is that also possible for a private loan, assuming we borrow the money from relatives?

First of all, I am not a banker. But I see only two possibilities:

1. Variable financing without a land charge

2. Financing with a land charge and a very short term (1 year?). The advantage is probably a lower interest rate, the disadvantage: land charge registration with corresponding costs.

In our case, the procedure for option 1 was as follows: the bank approved interim financing, we were able to use the money (in our case to pay invoices for the construction, in your case the land purchase). Then after handover and purchase price payment, the sum was retained by the bank, so the loan was repaid. Very simple and pleasant for us.

2. Financing with a land charge and a very short term (1 year?). Advantage probably a lower interest rate, disadvantage: registration of the land charge with corresponding costs.

Why? The land charge is already registered on the apartment, so no additional costs arise. 1 year may possibly be too short. 18-24 months offer more security and even here the prepayment penalty would not be excessively high.

One more note: If a land charge is actually registered, it is in first place – which means for you during house construction that other banks practically no longer finance or only with surcharges!

That is not true. The land charge is transferred in a follow-up financing by a new bank through a notarized assignment declaration from Bank A to Bank B; they arrange this among themselves with your consent. This means the original poster can today take out a bridge loan variable for the land and in the future complete the full financing with house and land at another bank. Then Bank 2 pulls the land charge from Bank 1 with the above-mentioned declaration.

The variable financing based on the 3-month Euribor is currently around 1%, depending on creditworthiness, institutions, etc., different values are of course possible.

There is also the possibility of a loan with, for example, a 24-month term and fixed interest, which can still be repaid at any time (without additional costs). Thus, there is no risk regarding the interest rates.

Best regards
Sabine