Construction drawings and costs for financing

Hello everyone,

my partner and I would like to build in a new development area. The plot is already reserved.

Our financial advisor has already identified a local bank that, based on our income and equity proofs, has basically approved the construction project. However, the overall project still needs to be reviewed by a central committee of the bank. For this reason, we are also asked to present the construction costs and drawings of our property.

And now we come to my question

Obtaining the mentioned items from an architect or a general contractor already involves costs. After all, none of them work without payment. And in the worst case, the committee decides that the project does not meet the requirements and we are stuck with the costs already incurred.

Is this the usual procedure? And roughly how high are these costs expected to be?

Thanks a lot for your advice on this.
Teufelchen

Hello Teufelchen,

yes, that is a normal procedure. Of course, the bank has to assess how the value of the property relates to the requested financing.
But for us, the offer planning was sufficient.
At that time, we were still negotiating with 2 providers – both had similar plans (of course, we had concrete ideas about our house) and also had a similar price (as the construction expert always writes, the price difference in our offers was +/- 5-10 TEuro).
We then gave one offer including plans to the bank and that was okay. That was how we got the financing commitment.
We then of course had to submit the "real", signed construction contract including plans afterwards.

Since we were building with a developer, the offers were free of charge. If you are now working with an independent architect and [HOAI] services are to be provided, then you of course have to pay for that.

Best regards
Micha

For us, the tender documents were also sufficient for an initial assessment. In the contract for work and services, we then agreed on withdrawal clauses in case the financing did not work out as planned. Planning would have cost us €2500 in advance.

As already written by the previous speakers. Construction description with price is sufficient. Only if you have a lot of own contributions, then of course the price is correspondingly lower. Then the bank may also require a plan or cost breakdown of the own contributions.