Combination construction financing - Is financing feasible this way?

Hello

Basically, it is about an idea for combined financing and I would like to know whether this would basically be feasible with a bank?

Regarding the data: the plot costs €50,000 all inclusive. For the construction costs, I calculate €350,000.

Desired financing composition
€170,000 private loan
€100,000 bullet loan 5 years (approx. 1% interest)
€30,000 equity
€50,000 Riester building loan immediate financing (allocation 10 years)
€50,000 construction financing 10 years with 1% repayment (approx. 1.5% interest)

Repayment plan:

Private loan:
Years 1-5 repayment-free, years 6-10 €1,200, year 11 repayment by follow-up financing
Interest: none

Bullet loan:
Years 1-5 repayment-free, year 6 repayment by savings plan with remaining term of 5.5 years at 2.5% interest. Currently funded monthly with €1,400.
Interest: €5,000 - €6,666 from savings plan = -€1,666

Riester building loan immediate financing with bullet loan:
Years 1-10 saving with €162 Riester-subsidized. Year 11 building loan (approx. €28,800 over 10 years at approx. €220)
Interest: (for bullet loan) = €7,500

Construction financing:
Years 1-10 monthly €105, year 11 repayment by follow-up financing
Interest: = €7,100

Monthly burden:
Years 1-5 approx. €1,820
Years 6-10 approx. €1,470

Remaining debt after 10 years = approx. €171,000

Financing from year 11:
Riester building loan = €28,800 10 years
approx. €220 monthly

Follow-up financing = €142,200 15 years full repayment
at 2% -> €910 monthly
at 4% -> €1,050 monthly
at 6% -> €1,200 monthly

I would appreciate your opinion.

Thank you

In principle, from the bank's perspective, you only have €30,000 equity. With total costs of €400,000 (ancillary costs not included), that will be difficult. Banks nowadays no longer finance that so easily.

Hello, this is a very high burden in the first years. What are you currently earning, and are the construction costs estimated realistically? The private loan is considered equity and must be used preferentially, but it must not be registered as a first charge in the land register. Who is providing it and how is it documented? Can the lender demand early repayment? You don’t want to get into trouble there. No bank will be rushing to finance your house with a bullet loan, especially not for 5 years and at 1%.

You will have to find a partner who agrees to this. The private loan is great, like equity, as long as it does not have to be secured in the land register. If this is to be done, especially in first rank, it will be difficult to find a bank. Why did you choose this structure, what motivation is behind it?

Thanks in advance for your answers. Currently, everything so far is purely speculation.

In principle, from the bank’s perspective, you only have €30,000 in equity. With total costs of €400,000 (excluding ancillary costs), that will be difficult. Banks nowadays do not finance that so easily anymore.

Basically, I have a good contact at a bank from whom I am currently getting an offer, but so far I have only told him my wishes and he said he will see what is possible. He assumes €200,000 as equity.

I have calculated €350,000 including ancillary building costs. As I said, at the moment this is only a wishful idea; the concrete building and financing planning is still outstanding.

Hello, this is a very high burden especially in the first few years. What do you currently earn, and are the construction costs estimated realistically? The private loan is considered equity and must be used primarily, but must not be registered with first priority in the land register. Who provides it and how is it documented? Can the lender call it back prematurely? You do not want to get into trouble. No bank will jump at a bullet loan, especially not for 5 years and with 1% interest.

Regarding the burden:
Net income: €3,100 x 14 months and in year 3 another savings plan will pay out €7,000.
The savings plan would reduce my monthly burden from the beginning of year 3 to €1,620.
Admittedly, I also consider that enormous; nevertheless, I want to consider this idea as a possibility.
The money comes from my father; the only thing I have to consider is that in case of inheritance I would have to buy out my sister. However, it is not quite the €100,000 because my father still has residual assets. Therefore, it does not have to go into the land register. A corresponding contract will be handwritten together with my father and my sister.
The bullet loan would be nice :D because of the interest advantage; let’s see what the bank says.

You will have to look for a partner who will do this with you.
The private loan is great as equity, as long as it does not have to be secured in the land register. If it is to be secured there, especially in first rank, it will be difficult to find a bank.

Why did you choose this structure, what motivation is behind it?

Yes, as I said, I could imagine that my acquaintance might be helpful there. As already mentioned, no land register entry is necessary.

My basic idea was to repay the loan as quickly as possible and to make the best use of the interest rate constellation. The savings plan I still have is well suited for this and can be funded annually with up to €17,000.

Of course, I also consider adjusting the proportions of the individual components. Especially since I do not yet have an exact building plan, I will have to do this anyway.

Then clarify the cost side, because it is quite low. What kind of house did you have in mind?