"Construction project with a 'special' initial situation"

What is a GU?

GU = General contractor who builds the house individually planned by your architect for you on a turnkey or ready-to-move-in basis (trades may be subcontracted). A contract for work is concluded.

we received the tip today (from someone at the Bauherren-Schutzbund...) that it is wise to first buy a plot of land and finance it separately and then build ...

Great tip. :confused: Did this financing specialist at least point out that the financing for the land should be structured as a variable loan, which can then be repaid and refinanced when building the house?

If not, you have (with a loan with fixed interest) committed yourselves to the subsequent house financing with almost 100% certainty to the initial financing bank, since it holds first priority in the land register.

In this situation, you would hardly find a bank willing to accept a subordinate registration.

Regards,

Dirk

Great tip. :confused: Did this financing specialist at least point out to represent the financing for the plot as a variable loan, which can then be redeemed and refinanced during the construction of the house?

If not, you have (with a fixed interest loan) almost 100% tied yourselves to the initial financing bank for the subsequent house financing, as this bank holds the first rank in the land register.

In this constellation, you would hardly find a bank willing to register only as a subordinate creditor.

Regards,

Dirk

I roughly understand what you mean, could you please explain that again in a way that a "layman" can understand :)

Sure, I'll give it a try:

If you buy a property and finance it with a fixed interest rate, the financing bank will have a land charge registered as security. This land charge is ranked first in the land register. This means that if there should ever be a forced sale, this bank will receive its money first (i.e., with priority).

A bank registered thereafter (in second rank) (which would finance the house) would then receive the remaining proceeds and may thereby be left with part of its claim unpaid.

Hence: this procedure makes the security for the second-ranking bank significantly less valuable, which will be reflected in worse terms.

If, on the other hand, the loan for the property purchase has a variable interest rate, it can be redeemed upon financing the house (then integrated into the house financing) and the first-ranking land charge becomes free again and can be used for the new financing.

Clearer now? ;)

yes ;)

for example, we would choose the path of buying a plot of land now (building in 1 or 2 years) and financing it in addition to the existing house; how does that work financially..assuming the plot costs about €80,000, is that then also an annuity loan or a private loan?

and..if we are absolutely certain that the bank financing the plot will also finance the house in 1 or 2 years, how does that work then?