Buy property now, and build in 3 to 5 years?

The problem with an existing property is that the purchase price counts as 100% financing. If you then have renovations, it will be difficult to get a higher loan. Because the financing then exceeds the 100%.

That would be the case with existing properties where one can bring equity. How is it when building? Do you need very little equity or possibly none at all? What about the incidental costs? Do you have to cover them yourself?

So when building, it is better to pay the ancillary costs yourself if you have no equity. If you have no equity, you can also provide personal labor. Personal labor actually counts as equity, but there is a certain limit. So that means you cannot provide 100,000 in personal labor. No bank will recognize that. But it is best if you talk to a bank advisor. Because as you know from forums, everyone says something different.

That would be the case with existing properties where you bring your own equity.

What about building? Do you need very little equity or maybe none at all? How does it look with the ancillary costs? Do you have to pay those yourself?

Hello Landu,

yes, it is mainly about the ancillary costs. The bank can finance the purchase price of the property at most, but not the ancillary costs. This is exactly the same for existing properties as for new builds.

However, the ancillary costs for a new build only apply to the land. In Bavaria, these currently amount to around 10% of the purchase price, so with a purchase price of €300,000, that means €30,000. You have to have this out of your own pocket; otherwise financing is not possible because the bank would otherwise grant more credit than the security provided by the house.

The property transfer tax and broker fees only apply to the land, and since the land is cheaper than an entire property, you also need less equity.

I see no problem on the equity side as to why you shouldn't be able to build.

Hello,

thank you for the suggestion. I will talk to a developer. So far, I have only spoken with Interhyp.

Best regards