Construction financing: Pay for the land in cash

Hello,

I have been thinking about building a house for some time. I have already found a nice plot of land for this, but I have not yet decided on a house. Generally not a big deal, if there weren’t more interested parties for the plot. Therefore, I would like to hear your opinions on my financing plan:

Equity available in cash: 215,000
Plot of land: 155,000 € - no broker commission, plus notary and 3.5% tax
If I pay this in cash, about 50,000 will remain. From there, I initially have no stress and can calmly look for a house. Here I would estimate a maximum of 200,000. Until the first installment payment is due, money will also come in. In the worst case, I would need 150,000 € from the bank.
I want to repay 1,000 € monthly and reserve the right to make special repayments of unlimited amounts per year; I am currently budgeting 10,000 p.a.
This way, I would be finished after about 7 years. If it "goes badly" and I "only" manage the 1,000 per month and cannot make special repayments... it will take 13 years and I risk paying more interest in the end, since I would only take a 10-year fixed interest period.

Are there any suggestions, tips, tricks regarding my thoughts?

Thank you very much!

Basically, your proposed option makes a lot of sense.

Regarding the land purchase, you have said everything in my opinion.

There are still 2 later issues:

1) I don’t think you will get a house for that price. Or is it supposed to be only 100 sqm without a basement? And even then, in my opinion, it will already be tight with the mentioned amount including incidental construction costs.

2) No bank offers unlimited special repayments for free, unless it is a loan with a variable interest rate. You should really commit to 5 or at most 10 thousand EUR, otherwise the option costs are higher than the interest savings.

Hi,

thanks for the first feedback.
Well, regarding point 1: it should be 140 sqm without a basement. I have some very good contacts (civil engineering, electrician, etc...) who can offer me very good prices for some services... If it ends up costing a few euros more... that's not a big deal...
2. I think one then makes 2 contracts: one KFW with 50k and then the rest as a normal loan? So you can set a maximum of 10k prepayment per year? I haven’t really read up on that yet. The bank then accepts my property and the existing equity as collateral?

As collateral, the property and the house on it will probably serve. The land charge will be registered in the amount of the desired loan.

Normally it is 5,000 EUR p.a., with negotiation you can sometimes get 10,000 EUR p.a. without an extra charge. Of course, more is also possible, but at some point the bank will hold out its hand and make you pay for the resulting risk. And of course, you can also combine the KfW there. Depending on the program (e.g., 153), special repayments are also possible. Then you would probably manage with that easily if more than 10 remain.

5%/year special repayment are now offered by many - except Sparkassen/Volksbanken. However, their financial partners usually then...

5% correspond to 5,000 EUR p.a. in the above-mentioned structure.

And that is probably offered by (almost) all banks.