Construction financing for the architect-designed house

I would simply use a mortgage calculator and see, for which amount and which term, what monthly payment results in the end. Just google it - that's what I would do before going to the bank.

I consider this approach completely wrong. Banks regularly overestimate there.

Think about the most important things (size of the house, building type, etc.) and from that the architect can roughly estimate. Then use any financing calculator online to calculate the monthly payment and decide for yourself whether this is what you want. After that, go to the bank..

You read along here regularly, don’t you? Every building novice at this stage thinks that for 200k they get a house +30k incidental costs with everything included.
What’s the point of going to the architect to express your wishes and dream if the awakening comes at the bank?

I consider this approach completely wrong. Banks regularly overestimate there.

Think about the most important things (size of the house, design, etc.) and from that the architect can roughly estimate. Then use any online financing calculator to calculate the monthly burden and decide for yourself whether that is what you want. Then go to the bank..

And I don’t think your approach is completely right.

Of course, I wouldn’t rely on what the bank suggests as long as they offer you more than you yourself have maximally set.
If you’re offered less, then of course you should think about why that is.

Basically, I would calculate what rate I can/want to pay. Then use online credit calculators to find out with which rate/term I get which loan amount. When you go to the bank with these considerations and then compare what they offer you, you can see quite quickly whether you’re on the wrong track.

For example, with a net income of €4,800, we set a maximum of €1,200 for the loan. That is 25%, and together with reserves we should still be able to manage if a salary falls short or is lower for a longer time due to wishing to have children.
The bank probably would have allowed us up to €2,200 ^^

Once you have an idea of how much loan is realistic, you can communicate this budget to the architect and they will start planning.
And I find this point enormously important. Because how is an architect supposed to plan a house if they have no cost limitation at all?
I think for 95% of home builders, the financial framework is the limiting factor that should not be exceeded. So why should I initially deliberately refrain from telling this to my partner and representative?
I can imagine it’s pretty frustrating if they plan you a house that is €150,000 too expensive and although you’d like that, you simply can’t afford it.
To then reduce such a design without impairing functionality/appearance is almost impossible.

So it gets completely scrapped and adjusted to the budget. So why not set the budget from the start if it is usually enormously important to the builder that costs don’t get out of control?

We initially worked with an architect and then signed a contract for a turnkey house at a fixed price with a construction management company. The reason for this was that the architect, try as he might, could not provide a price he could be truly confident in. We wanted to avoid this uncertainty.

However, it also exists in our final price contract. I would say that, despite efforts, I cannot calculate more precisely than within 15-20K, and I already consider that quite meticulous. There are simply too many unknowns in the equation.

That would not again be our criterion. I wish you a lucky hand in your decision.

Gabriele

Construction company: Fermo, I have worked for very satisfied clients there several times. Unfortunately, they don't fit into our budget. Otherwise, we would have taken them with open arms.