Cost planning for construction financing - how specific does it need to be?

Hi!

I have a property with an existing building in sight, where the existing house is to be demolished and a new building constructed. The price to be paid plus additional costs for the property are, of course, known.

I have also asked a general contractor for a first rough estimate for a house with approx. 200m² of living space. This includes various estimated items such as demolition costs, costs for an EMA, costs for exterior design, etc.

I inquired about everything at Interhyp and received an offer. However, the advisor writes that the offer is subject to the property value being confirmed within the scope of the bank appraisal (which is somehow clear). BUT he also writes that we should get together again when the costs are FINALLY calculated. I am now wondering how exactly that is supposed to work? It takes weeks until everything is finally planned! And even during construction, there are always follow-up questions about whether you still want this or that, whether it should be a higher-quality flooring, and so on and so forth... not to mention the frequently occurring additional costs that no one has on the invoice in advance....
It already starts with the demolition costs that need to be calculated. I have been trying for two days to get a company willing to come out and make an offer. Apparently, they are all so overloaded that they only make offers when the construction description and building figures are available.... which is not the case here – an on-site appointment is necessary.

If I were to have everything finally calculated, it is to be assumed that the property will be gone by then. Hence the question, how do you see the statement from the broker? They are apparently so busy in the current real estate market situation that I have not been able to get through by phone for two days to clarify my request.

One thought I had was whether I should simply buy the property with 90% equity, which is available, and thus initially only take out a very small loan for this purchase, to then calmly calculate everything and apply for the large loan with the property as collateral. How should this be assessed?

How have you proceeded in such cases? I would be very annoyed if I now spend weeks with appointments, planning, etc. and then the property is gone.

My idea was to take €1,300,000 as the total cost basis for financing for the project, which is roughly planned at about €1,200,000, in order to cover special requests such as EMA, higher-quality flooring, building technology, etc. I simply cannot finalize calculate a smart home system, bus system, etc. before I buy the property.....

Looking forward to assessments & tips.

Best regards
Oliver

Hello,

he finally meant that no nasty surprises will come.

If the planning is as good as we are through for you, even better. But if there are already insights that something could be too cheap, or the bathroom should become more expensive and and and

A refinancing can either be managed through equity or financed expensively afterwards. That's why it's better to build in a buffer and have it calculated that way

I also cannot assess each individual block 100% without offers. If the property including ancillary and demolition costs is roughly estimated at 660 thousand euros and the standard description for the architect-designed house amounts to 446 thousand euros, then I would say that the buffer of about 200 thousand euros should be sufficient to finance extras such as electrical work, property walls, special requests for house electricity, burglar-resistant doors and windows with higher RC rating, a kitchen that is not included and which I also cannot have calculated in detail yet before there is even a kitchen layout....

Even if the budget is exhausted at some point, with this I will definitely have a house standing and can possibly have some things done afterwards (house electrical work, however, not, but things like the garden, etc.).

Or do you think such an approach is not good?

In this price range, 200,000 will probably be spent quickly if the kitchen is then rather in the mid five-figure range, plus additional costs, possibly more furnishings, multimedia corresponding to the price range, pool, etc. Are the 1.3 million the limit (from you or the bank)? Otherwise, I would set it at 1.5, the money is quickly spent or used as an extra repayment in the first few years.

Peanuts74 is right. If it really should become "higher quality"... money flies through the fingers incredibly fast. We originally had 650k and are now just over 1 million. Someone always comes up with something new ;) Last week's disgrace: living room with integrated automatic screen + native 4k projector + nubert speakers in the ceiling for atmos. Cost: 23,000 EUR..

1 million just for the house?

I simply think it makes sense to set the maximum financable budget for the financing, and with that you just have to budget... it's also clear that with the budget I can't get every imaginable luxury. Anthracite clinker look etc.