Condominium and preparation for additional home purchase

Hello everyone,

we are currently paying off the loan for our 2014 condominium (installment 1200EUR). However, I am thinking that during this loan term we might be able to buy a house. Therefore, we are currently not using our special prepayment options for the condo, but are instead saving equity again (after all expenses and reserves, 2000EUR/month).

We would like to keep the condo (rented out) alongside the house because the apartment seems perfect for us or our parents in old age (barrier-free; city center, doctors, supermarkets, restaurants, public transport and train all within walking distance).

What will probably be rated better by banks & co when searching for a new loan for a house: more equity or lower debt on the condo loan? In short, special prepayments or saving? Or are two parallel property financings basically a no-go?

Thank you very much for your assessment!
Jo

"less debt" on the ETW will not bring you anything since a first-ranking mortgage is already registered on the property. And therefore the new bank would have to accept second-ranking status - which practically no bank agrees to.

In the question of A or B, equity capital is clearly to be preferred, as it can flow directly into the house. A second financing is not a no-go. Whether the bank agrees depends ultimately on whether you are solvent enough from the bank’s point of view to safely service both loans.

A special case would be to try the second financing with the bank of the ETW, then they would benefit from the mortgage on the ETW and have more collateral.

Thank you Fuchur, for the clarification. That is understandable. I was just wondering if "More debt and more equity" in the banks' score might possibly amount to something similar to "Less debt and less equity." Jo

If you cannot fully pay off the apartment with the equity at the moment, then use all equity for the house financing. The bank makes an actual assessment of liquidity and creditworthiness based on the "monthly apartment installment," which does not initially change due to the special repayment. However, the "monthly house installment" may be lower if the equity is used for the purchase.

It will be difficult to explain to the bank that you rent out the apartment from [ab...] for [xxx€] yourself because that initially overlaps with the house construction. But if the location of the apartment is good, the bank should understand that the apartment will pay for itself after moving in.

Thank you Mottenhausen for your reply.
Then let's keep saving :-)