Collateral value & equity

  • Erstellt am 2016-02-16 19:24:24

Sebastian79

2016-02-17 09:06:40
  • #1
Has less to do with serious ;)
 

Steffen80

2016-02-17 09:06:46
  • #2
@TE: All your calculations are actually completely useless and nonsensical if you only want to build in a few years. By then, everything could have changed anyway. Just save full throttle equity and when the time comes... you can make concrete calculations.
 

Musketier

2016-02-17 09:35:13
  • #3
I do not consider the calculations or the understanding of how a bank determines the lending value to be pointless.

Assuming the original poster is considering paying off a loan/Bafög etc., but in doing so would block themselves from falling below 80%, or they are investing now in a long-term investment (e.g. condominium), but then exceed a 100% lending value, this can certainly have effects in 2 years that one might not have made with knowledge of the lending value calculation.
Similarly, it could be sensible to postpone the construction by half a year when reaching a lending value threshold.
 

Aliban2014

2016-02-18 20:21:57
  • #4
Good evening again!

Many thanks to everyone who has responded/commented on my post so far.

:
1) The keyword "BelWertV" already helped me a bit further. So, the determination of the lending value is about the cost approach for an owner-occupied single-family house. Thanks for that!

2) This is really embarrassing for me, but what kind of formula is that in text item 2? Naively, I thought until the moment I read this that if (after the bank’s deduction of non-value-retaining costs) I invest equity of €100,000 for costs in the house and the house and plot are then "worth" €400,000, I would be standing at a ratio of 25%? Oh dear.

3) So far, I have assumed that the bank makes a percentage deduction on the costs for the house including the plot, e.g. 15%, to arrive at the lending value. That would also mean a 15% lower valuation of the plot, which would not have made sense to me (unless purchased at a higher price, as you said), sorry for the misunderstanding. The deduction should then not relate to the plot but "only" to all "construction costs".

6) I have understood that so far, but if certain costs have already been paid by us beforehand (or turn out to be higher, e.g. connection, architect), our equity is already pretty depleted. Then we could, for example, no longer pay for the chimney, floors, or bathroom/WC out of equity. Therefore, I wanted to know whether it was common among previously successful home builders or acquaintances that, for example, floors or chimney were deducted from the loan or paid with equity? Experiences from home builders with a usual ratio of 15-25% who could be comparable to us would interest me.

Do you then first pay part of the bill for, e.g., the shell construction from the remaining equity you still have? And the bank adds the rest and then takes over every bill for floors, etc.? Because the equity is then quickly at "0" at the beginning.

----

I have now read on another website (could be advertising, so I will leave out the name for now) that the lending value is actually not the final value the banks use as the minimum basis for a loan? It was written there that if the lending value is, for example, 80%, the credit institutions still have a lending limit, which can also be up to 80% at the peak, at least without large interest surcharges.

As an example how I understood it:

Value of construction project: €125,000
Lending value: 80% = €100,000
Lending limit: 80% = €80,000

Although it is still possible through interest surcharges to increase the lending limit to 100% of the 80%. I imagine that if our ratio in the case I described is even only 90%, financing would become significantly more expensive. Regardless of the interest level.

If architects cost SO MUCH more, then we would have to finance many items that would otherwise have been paid with equity. Thanks for pointing that out to me!!
(sebastian79, steffen80).


We also plan to do it that way with equity, but I want to know 100% about every aspect of financing/construction beforehand if possible. Since I know I have a steep learning curve ahead of me, I prefer to start early enough ;-)


Thanks! That is exactly why I asked, to weigh decisions and recognize the consequences.
 

toxicmolotof

2016-02-18 21:56:48
  • #5
The matter of how the bank ultimately assesses something (e.g. real credit limit) is not your concern, but rather is related to the bank’s refinancing. So... don’t worry about it. Overall, all the calculations are pretty pointless... what you should be interested in at the end is: What interest rate do you get for the project. And with one bank, you get the 90% condition at 1.80, with another the 80% condition at 1.85... because every bank may vary a little. With one you are at 79%, with the other at 81%. It’s no use worrying about that.

You should understand the following terms content-wise: construction costs, incidental construction costs, land value, special requests (all of which more or less flow into the value of the property) as well as ancillary acquisition costs, furniture, decoration, design (which as a rule are not included anywhere and in fact reduce your equity before building even begins).

It’s similar to transfer costs for cars... you have to more or less pay them, but you never get that "value" back.
 

toxicmolotof

2016-02-18 21:58:06
  • #6
And the formula under 2 basically only represents the ratio of the lending value to the financing share.... and the rest must then probably be the equity. ;-)
 

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