Bridge financing?

Hello,

the following:

We have reserved a property that we would like to buy, but we still have our condominium that we need to sell.

The best way is probably with a bridge loan. Who has experience whether there are other options for bridge financing?

Best regards, Caro

Hello Misscaro,

in principle, it is possible to bridge the expected sales proceeds from the sale of the apartment (so-called "purchase price bridge financing"). Make sure to have a variable condition or a maximum interest fixation of 1-2 years.

But beware: First, you must deduct any remaining loans on the apartment, and second, you could put yourself in a tight spot with this approach.

Namely, if you do not find a buyer for your apartment in the short term. Then, at some point, you will be forced to lower the purchase price to facilitate a quicker sale.

Better for you and associated with higher planning security would be the following approach:

1. Find a buyer for your apartment
2. Only then purchase the new property

Furthermore, the transition periods can usually be better arranged this way (i.e., the date of your move-out and the final handover of your apartment to the new owner).

Best regards

M. Thiemann

Current Status

I have already listed our apartment (fully paid) on the internet, and there are already some interested parties and many real estate agents.

We have already received the documents for the bank(s) for the financing from our architect.

It concerns:
Land (including ancillary costs) €98,000
House construction (including ancillary costs) €188,000
Total: €276,000

Condominium proceeds €160,000

We asked our house bank once: They would first grant a loan (variable loan with valuta) of €98,000, which we could repay directly, and then a loan of about €120,000 for the house. We would like to use the €60,000 from the apartment as equity since we will almost completely do the interior finishing ourselves (except heating, electricity). An offer for bridging finance is already available; we have an appointment tomorrow morning for the loan sum.

Another provider suggested a loan for the entire construction sum + land with a special repayment from the proceeds of the apartment.

Which is probably the better offer?

Best regards, Caro

Hello Caro,

I advise against fixing only a part of the financing at the beginning.

The bank will then block the land register for you and can subsequently freely set the interest rate for the second loan portion, leaving you with no alternatives.

You should try to secure the financing as completely as possible at the start and then repay the interim purchase price financing from the proceeds of the apartment sale.

Best regards and good luck.

M. Thiemann

Thiemann

Thank you for the responses. I just received a good offer for the total amount with 3 loans:

1. Variable loan
2. Fixed loan with building savings contract
3. KfW loan

That would work well for us.

I still have the appointment with the house bank tomorrow for comparison.

Good night.

Best regards, Caro