Construction financing - How will it change in the future?

Not at all. In regions where 1.2–1.4k rental properties (cold rent) are snapped up in no time, you won’t buy a house for 350k either, at best a house in need of major renovation or even restoration. We’re talking about half a million and up for a normal detached or semi-detached house, and the amount mentioned above is not enough to pay that off in 30 years.

You can’t say that so generally. You can get a semi-detached house with a small plot (250–300 sqm) here for 400k including everything. You can service this amount with a payment of 1.4k over 30 years. Even if it takes a few years longer, I’m a civil servant in a position where this burdens me less than others and would fundamentally be possible.

Well, not much is missing. Depending on the condition, you get to half a million with 1400 in 34 years. The difference isn't that huge

Exactly, and since I would have to pay rent without property even in retirement, I don't have to have it fully paid off in 30 or 40 years. Possibly 40 or even 60 years are enough, as long as the equivalent value is there and the bank finances it. Whether I also pass on debts to my heirs is irrelevant, as long as they come out with that much under the line in a sale. That they get by until they can stand on their own feet.

Exactly, and since I would have to pay rent without owning property even in retirement, I don’t necessarily have to have finished paying off in 30 or 40 years. Potentially 40 or even 60 years are enough, as long as the equivalent value is there and the bank finances it. Whether I also pass on debts to my survivors doesn’t matter as long as they come out with that much under the line when selling. That they get through until they stand on their own feet.

But you must not forget that the financing bank has to go along with that. Basically, it is possible. So if you finance beyond the retirement age, some banks will frown because they then have to check the situation including retirement income, etc. According to the residential credit guideline, a loan must be designed so that it can be repaid during the borrower's lifetime. So a bullet loan until age 85 without repayment substitute is not so simple. Even if the property is worth five times that. Such constellations were more common in the past. All very simplified, described. Unless there are very individual reasons to handle it differently, I would recommend everyone to have their loans paid off by retirement.

Yes, of course, not every bank goes along with that anymore.

I had an informal conversation with a bank about a construction loan to determine our credit limit. According to the contact person, we could easily repay €2500 per month. When I pointed out that I only want to repay a maximum of €1400 (I am the sole earner and we are expecting our second child), she responded with incomprehension and said that was complete nonsense and that with the low interest rates we could build our dream house instead of having to make compromises somewhere. And besides, we can finance for 40 years (we are 23 and 25).

I believe that this is not responsible behavior on the part of the credit institution and such an approach should actually not be tolerated, since with the bank’s proposed approach I wouldn’t be able to build up any reserves at all. So it’s anything but healthy.

That is also the reason why we have closed our various accounts there and opened new accounts in one fell swoop.

Yes, that sounds more like snake oil salesmanship.