Construction financing and (subsequent) self-employment

Hello everyone,

straight to the point: Does anyone have experience with the initial financing of their house - taking out a loan as an employee - and then switching to self-employment afterwards? That means the first fixed interest period is still running, and during this time one switches to self-employment.

My questions about this: What does the bank say that calculated the (usually cheaper) conditions/interest rates for employees? Should one expect any consequences upon entering self-employment? And how does it behave after the fixed interest period expires, is the nasty awakening certain?

As you can imagine, this planning option will most likely affect me... So it can even be asked provocatively: If I know that self-employment will come in the next few years, is it not sensible to "quickly" build with cheap employee conditions and a very long fixed interest period? Almost knowingly "leading the bank astray"?

What comes "afterwards" doesn't interest anyone - at least not the bank. You have no obligation to inform about changes to, for example, the employment contract or the loss of salary.

It's different if the loan installments don't get paid: the bank can quickly initiate a forced auction (to my knowledge within 3 months)... you can come up with whatever you want: whoever doesn't pay, loses out.

The question is: who are you deceiving - the bank or yourself, if funds can't be transferred due to lack of income??

But you do know that self-employment usually requires a lead time of about 2 years to become truly profitable?????

Hello Sebastian,

basically no bank can prohibit you from changing jobs. In fact, the bank has you in a completely different position, namely the first rank in the land register and - should you actually switch to self-employment - the bank will want to receive at least annual status reports from you on how your business data looks. If you need credit for your self-employment, no bank will accept being subordinated behind your current bank in the 2nd or 3rd rank on reasonable terms, nor will your current bank grant another bank the same rank for business loans, i.e., you are more or less married to your current bank and if you need loans that do not come from external lessors/financiers and must be secured by mortgages, you will have to bear the increased risk at that point; but then immediately.

If your self-employment is viable from the start and you only need little start-up capital, the question does not arise, of course, but you should work towards the maturity date of the fixed interest period and possibly be able to repay part immediately. That pleases the bank and keeps any potentially increased follow-up interest rates in check.

Best regards
Dirk Grafe

There are no different conditions for self-employed and employees (at least for the 08/15 home financing). The bank doesn’t care about your job over time at all... ... but what is important is that all installments are paid on time.

Well, as a self-employed person, you are subject to a more differentiated examination and it can also happen that Bank X says they will not finance Loan Y at all because they are not familiar with it or generally do not want to bear the risk. However, this is nothing unusual; as a self-employed person, you can/must get used to it.

I personally had no problems when buying the house, but I once contacted a refinancing provider because I wanted to know if and how it could work out for me – but the provider categorically excluded self-employed people, their target group was simply different. So, there were no special conditions for the self-employed, but simply none at all.

Best regards
Dirk Grafe