Confusion of thoughts / Credit drawdown / Interest-free period / Interest

Dear users,

we have reserved a plot of land and want to start construction in late summer.

Some data about this:

The house will be built by a prefabricated construction company. The plot of land for this is sold by a sales representative who is connected with the construction company.

My question is: The notary appointment is supposed to be in March. The money for the plot of land + the incurred taxes (real estate transfer tax; notary, entry in the land register etc.) will then be due.
We have already had several financing discussions and are also leaning towards one.
In all of them, the payout was set at 100%; i.e. in one lump sum.
Would that mean the entire loan amount will be transferred to us; we pay for the plot from this. The additional purchase costs must be paid from our own capital.
What happens to the remaining loan amount?
The house is paid 95% after the interior construction and 5% upon handover of the house.
How is the interest-free provision period calculated then?

Where is my fault in reasoning? I just can’t figure it out.

Tomorrow evening the bank advisor will come to us again, but I would have liked to know it in advance.

Thank you in advance for your answers.

Hello amelie74,

the 100% payout does not mean that you have to receive the loan in one lump sum.

Usually, especially with a new build, you can draw the loan bit by bit and then only pay interest (and possibly also repayment) on the drawn part.

100% payout simply means that you can draw the full loan amount, and not that part of the loan amount is already used as interest prepayment (a so-called discount).

The interest-free commitment period tells you how long you can take to fully draw the loan.
This means, for example, the bank grants you 9 months of interest-free commitment period – then you should have fully drawn your loan by the end of the 9 months. If you haven’t yet because, for example, the handover has not yet taken place, you have to pay commitment interest (usually 0.25 - 0.5%) on the undrawn loan amount to the bank from that point on.

Do you have any more questions about this? Then just send them over.

Regards,

Dirk

Hello amelie74,

with pleasure.

The bank will presumably also only disburse according to the construction progress with you (corresponding proofs then have to be submitted by you).

The background is exactly the security of the loan mentioned by you, which would only be partially given in the case of an undeveloped plot.

Regards,

Dirk

Provision interest is a nasty thing. We had 12 months of free time, signed the contract, and 11 months after signing, the house was ready. Unfortunately, almost 4 months passed after that during which we had to pay interest every month on the amount not yet drawn. That hurt because it’s basically good for nothing. Have the construction company clarify a move-in guarantee for you and when you can move in. Interior finishing usually takes 3-4 months after the house is set up. Our construction company now states a waiting time of 13 months.