Current processing time for construction financing applications at banks

I recently bought two apartments. On October 7th, I had a bank appointment for that. We went through all the documents there and finalized the loan. Everything was discussed etc. He said it would take a while until we have the contracts and can sign them. The notary appointment for the 1st apartment was then on October 21st. The notary appointment for the 2nd apartment was on November 19th.

Since then, of course, invoices for the notary, land registry, purchase price payment, broker, etc. have regularly arrived.

For that, we simply overdrew my account. Last week, the call finally came that we can sign the notary contracts on December 29th.

So... things are currently dragging on a lot with the banks.

And by the way. I would not recommend such an approach to anyone who does not have an absolutely good relationship with their bank and their processor, as it does carry a certain risk.

By the way, I don’t have to pay overdraft interest :D oh yes, the bank is a regional Sparkasse.

Good thing you already said it yourself: This is playing with fire. Unless you have extremely good finances. Because paying “invoices for notary, land registry, purchase price payment, broker, etc.” straight from the checking account and with an overdraft would probably not be possible for most builders.

Loan: 550K
Equity: 50K
Net income: 5K
Car loan: 16K remaining 400€/month

So we also have 5k net, but 200k equity and an advisor from the Dutch bank said they would finance us up to 500k. That’s why I don’t understand why your financing shouldn’t be a problem.
You want more money than us and have less equity.

We didn’t pursue the Ing-Diba plan further because the Sparkasse offered better conditions. They would also finance us up to 550k.
(Only verbal statements, but we wanted to know what our margin for additional financing would be in the worst case.)

So we also have 5k net, but 200k equity and an advisor from the Dutch bank said they would finance us up to 500k. That's why I don't understand why your financing shouldn't be a problem. You want more money than we do and have less equity.

We didn't pursue the Ing-Diba plan further because the Sparkasse offered better conditions. They would also finance us up to 550k.
(Only verbal statements, but we wanted to know how much room we would have for additional financing in the worst-case scenario.)

In your case, I see it this way: the bank was willing to finance you 100 times. In our case, it would actually be 110%, which was promised to us in advance during the terms inquiry. As far as I know, Ing-Diba also goes up to 110% without problem, we had clarified this beforehand. The amount of equity is not decisive in every individual case; maybe in your case the bank did not value your house building project at 750k object value.

In addition to the mentioned equity, we also have some buffer, which we proved with account statements. I do not assume that they did not approve the creditworthiness. We will learn more only after the holidays, so we are consciously taking a step back – it only causes stress now to rack our brains with unnecessary assumptions.

I read your answers calmly, but I actually have one more question. Maybe someone among you knows: if we now receive a final rejection from Ing-Diba, does that mean it will be recorded in Schufa for one year and it makes no sense to apply to other banks? Would they also reject us because of the Ing-Diba rejection? What if we decide on another, somewhat cheaper property (a semi-detached house, for example)? Do we have to wait 1 year until the entry is deleted?

In your case, I see it like this: the bank was willing to finance you 100 times.
In our case, it would actually be 110%, but that was promised to us in advance during the conditions inquiry. As far as I know, Ing-Diba also goes up to 110% without any problem; we had clarified that in advance. The amount of equity is not decisive in every individual case; perhaps in your case, the bank did not value your house construction project at 750K object value.

In addition to the mentioned equity, we also have some buffer, which we proved through account statements. I do not assume that they did not approve your creditworthiness.

It has been observed for some time now that banks no longer finance everything fully. If you are talking about a new build—I assume so due to the mentioned low incidental purchase costs. The 110% only describes the loan-to-value ratio. The bank would have to give you more credit (€550,000) than it assumes for the loan value of the house (€540,000). Maybe they are even calculating more conservatively nowadays.

What is the price of the land, and how has it developed over the past few years?

The other benchmark revolves around the sizing of the loan—that is, the ratio of your household income to the loan volume. The upper limit is between 100 and 110. And you are already brushing against that.

Do you have time and feel like explaining that in more detail? It’s something I don’t quite understand, and I’m not an expert. I assumed that due to the enormous borrowing and money flood, real estate/houses are a good investment, especially since many international corporations, if I’m correct, are buying houses and real estate in Germany. Why is "the money in the bank" more valuable to a bank than (initially shares in) real estate and houses?

If everyone thinks like you, it’s time to start thinking. See the housewives’ boom. Everyone believes that you can only win on the stock market, with ETFs, with Bitcoin, or with real estate. There is no risk, it only goes upwards. Until supposed certainties are tested...

Which corporation buys a single-family house or semi-detached house in the middle of nowhere? It’s ordinary people who are taking on more and more credit to grab yet another supposedly rare object, going right up to their limits. See the current example here in the thread.

Banks are becoming more cautious, the new Corona K dominates – whoever has (a lot of equity + income) still gets something, the others are out. And you asked the exciting question yourself – why do banks do that? Because the risk keeps increasing, and presumably one can only finance the exaggerations with equity – not through the bank.

If a €700,000 property, which was €550,000 two years ago, is to be financed, you’ll manage it if you bring along the €150,000 “increase in value” yourself. Banks increasingly assume that in a forced sale they won’t be able to realize that again, and don’t simply apply -10% from the arbitrarily increased sale price to the lending value.