Construction financing through an insurer

Hello everyone,

we are currently looking for a lender and have received a quite good offer through Interhyp. However, the lender is not a bank, but an insurer. Is there generally a difference, or won't I notice whether the money is coming from a bank or an insurer? The conditions are quite good, only that the payment frequency is quarterly, which I can personally live with well.

What are your Interhyp experiences in this regard? I hope for some answers.

Thanks!

Hello,
there will certainly be people who see no problem in financing through an insurance company. However, the core business of an insurance company is insurance and not construction financing – what happens if the business policy changes or if, to make profits, the credit business is handled by selling the construction loans?

There have already been some unpleasant surprises in the past with certain private banks, and even flawless loans were sold – to speculators who then increased the collateral since the mortgage lending value of the property had decreased. Just google the topic for more information...

For me, the point about selling loans would be very important, and there should be a regulation in the contract under which conditions a transfer is possible.
It is common practice that loans are sold for refinancing purposes, but limits can certainly be set...

Furthermore, the topic of follow-up financing... insurance companies have discovered the construction financing market for themselves, hence the good conditions. But what if the business is no longer profitable for them in a few years... sure, then you can look for a new bank, but they may require new collateral, calculate the mortgage lending value worse, and reassess creditworthiness.

Especially for the reasons I mentioned, I prefer financing through a savings bank or cooperative bank, as construction business is usually a long-term endeavor there – even if the interest rates might be somewhat higher by up to 0.5% – what matters to me is solid long-term business policy.

Best regards

Still the topic of follow-up financing... the insurance companies have discovered the construction financing market for themselves, hence the good conditions. But what if the business no longer pays off for them in a few years...... of course you can look for a new bank then, but they might demand new collateral, calculate the lending value worse, re-evaluate creditworthiness.

Especially for the reasons I mentioned, I prefer financing with a savings bank or cooperative bank, as construction business is usually planned for the long term there – even if the interest rate might be up to 0.5% higher – solid long-term business policy is important to me.

Best regards

The issue of changing the lending value can happen to you with a savings bank or cooperative bank as well. If the bank changes the credit granting rules, then you probably have the issue also with a follow-up financing.
With a loan amount of €200,000, a 0.5% interest difference over 15 years fixed interest means a residual value difference of €15,000.
Even if the insurance company no longer conducts the credit business, I can easily transfer the land charge to a new bank for €15,000.
Our conversation at a cooperative bank in spring this year was a no-go. (poor conditions, no flexibility, lending only up to 60%, the rest only through building savings contracts or consumer loans, etc.)

The topic of selling claims is obviously an issue of its own.
However, there are somehow contradictory statements about under which conditions loan terms may change after a sale. Whether that is only allowed in case of default or also already upon takeover.
By the way, savings banks also apparently have not fundamentally ruled out selling claims.

Insurers are just as suitable or unsuitable for a construction loan as any other lender. There are insurance companies that have been in this business for decades. The loan conditions are decisive.