Construction financing and contract with the developer

Hello everyone,

my wife and I have been thinking about building our little house. Right away: We have no idea yet and are just starting to collect information.

In a conversation with the developer, the following situation arose:
The construction contract must be signed in order to submit it to the bank, which can then give the okay for financing. Without a concrete contract, banks cannot/will not/make no commitment.

For understanding: I sign a contract that obliges me to build the house, but the bank then says "no." So, now I don't have the money, but I have a contract with the developer who is entitled to demand fulfillment of my obligation (money). I had thought until now that you get an offer from the developer and then go to the bank with it, which then tells you if it works or not.

How does this usually work? I can't imagine that every builder would take this risk.

Thanks for your help

Hello,

In a conversation with the developer, the following situation arose:
The construction contract must be signed to submit it to the bank, which can then give you the approval for financing. Without a concrete contract, the banks cannot/will not/may not give a commitment.

That is not correct – do you want to use financing through the developer (certain or rather general contractor)?

How does something like this usually work? I can't imagine that every builder would take this risk.

You go to the bank or a financier you trust and clarify your budget with them. Only when you know your financial possibilities can you even decide whether and what you can and want to afford. Purely buying the land/house alone is not enough

Regards from the Rhineland

How does something like this usually work? I can't imagine that every builder would take this risk.

This is how it worked for us, and I believe this is the best way when buying from a developer:
- The financing was applied for with the purchase contract draft.
- The notary appointment took place within 14 days of receiving the loan agreement.

If the financing fails, this is communicated to the developer with regret. Conversely, if the notary appointment falls through because the developer has meanwhile sold to someone else or otherwise changed their mind (rare, but not impossible), the loan agreement can be revoked.

Hello, completely the wrong way that someone gave you. You can take a draft to the bank and have it checked. This draft should, of course, not differ after a loan approval.

And maybe the bank will say yes, but on terms that you yourself don't even want.

Thank you for your answers. That helps me for now.