Construction costs are currently skyrocketing

AWESOME! This is currently enough to drive you crazy.

In various contracts of construction companies, clauses with a penalty of 3 or 5% are very popular. I have already heard that construction companies leave customers hanging if they do not pay more than the agreed construction price.

CRAZY! This is currently enough to make you despair.

In various contracts of construction companies, clauses with a penalty of 3 or 5% are very popular. I have already heard that construction companies let customers down if they do not pay a higher price than the agreed construction price.

What do you mean by that? Penalty for whom and why? How could a construction company "force" the customer to pay a higher price in connection with a penalty? That would really be unpleasant..

How do you mean that? Penalty for whom and why? How could a construction company "force" the customer to pay a higher price in connection with a penalty clause? That would really be unpleasant..

Quite simple, in many construction contracts two things are usually included. The 12-month fixed price guarantee. This often refers to the construction phase, but there is no regulation on who is responsible for a possible delay. The company then just takes 15 months and voilà.

Then there is another common clause. The construction company commits to building x for an amount y. The penalty clauses then state a daily rate of z euros and a maximum of 3 or 5% interest on the amount y. That means with a construction sum of 500,000 euros and 3%, the company can exit the contract with a penalty of less than 15,000 euros. They then just say "go ahead and sue me."

We roughly calculate our new project with a total cost of €610,000, with about €130,000 in equity. I arrive at interest rates of 2-2.1% for 15 years, 2.2-2.3% for 20.

Where do 10 years stand with you? What helped me a lot was the comparison calculator from FMH. Basically, with such a small difference, I would just go for 20 years. It was anyway an observation I made that the step from 10 to 15 years is rather not worth it and that it's better to go straight to 20 years. Just a bit more expensive but 5 years longer.

Quite simple, in many construction contracts there are usually two things included. The 12-month fixed price guarantee. This often refers to the construction phase, but there is no regulation about who is responsible for a possible delay. The company then simply needs 15 months and voilà.

Then there is another popular clause. The construction company commits to building x for an amount y. In the penalty clauses it says, per day z euros and a maximum of 3 or 5% interest of the amount y. That means with a construction sum of 500k euros and 3% the company can exit the contract under 15k euros penalty. Then they basically say "sue me".

Okay, with us neither the one nor the other is in the contract – that’s why I asked. Penalty is only in our favor and is tied to the delay in time without a maximum cap (maybe there is a cap in the Construction Code). Fixed price is guaranteed fixed price up to move-in. //Sorry for all this off-topic.

Where do 10 years stand with you? What helped me a lot was the comparison calculator from FMH. Basically, with such a small difference, I would go straight for 20 years. It was anyway an observation I made that the step from 10 to 15 is rather not worth it and it is better to go straight to 20 years. Just a little more expensive but 5 years longer

The 10 years range from 1.66 to 1.8. Overall, I felt there was little choice among the banks (at Interhyp, but you always only see 5 there), and a wide range. It also went up to 1.91. When we used their online check 2 years ago, the interest rates were closer together if I remember correctly.