Decision aid: special repayment or saving equity for a single-family house?

Yes, all good... I didn't want to start an eager discussion about the eternal topic of "working hours per week" for teachers here. Every job has its own requirements, advantages, and disadvantages. We teachers have the great advantage of being allowed to do part of our work flexibly from home. The disadvantage, however, is that this work (because it is done at home) is not recognized by outsiders.
Long story short. A study room is needed!
Is the equity invested in an existing property really calculated by the bank like cash? For example (of course very simplified)
Property value approx. 300k
Debt 80k
Equity 220k

New construction costs approx. 500k
Financing amount 280k

Is the equity invested in an existing property really calculated by the bank like cash? For example (of course very simplified)
Property value approx. 300k
Debt 80k
Equity 220k

New construction costs approx. 500k
Financing amount 280k

I don't see any equity here, just an asset item.
The asset item either has to be converted into cash or the bank has to provide 100% financing secured on two properties. This financing is possible thanks to the prior load and the problem that the existing property is only considered as security at 60% of the lending value (not market value or possible sale price!).

Answer to your question: There is a huge difference whether you have tied assets or cash.

We would have to repay the KfW loan early anyway. It expires in 2021 with an outstanding balance of 37k.

Uh, why? At the end of the fixed interest period, you can repay the outstanding balance (without prepayment penalty, right?) Then the next question would be: When can you terminate the bank loan according to §489 of the Building Code, and is there possibly an existing option for special repayment on this loan?

What do the banks say about that? Bridge financing? Variable interest rate?

Yes, that is possible. But, how high is the registered mortgage on the condominium and how high is the outstanding balance (120k with or without KfW?) And how much will the new plot cost and what about the construction obligation? How quickly do you really want to build? Hmmm, with a contract from 2007, wasn’t termination due to incorrect revocation instruction possible? Well, that option is over anyway. By the way: I’m doing something similar, I’m missing a few € for the new plot, so I re-mortgaged the free land of the condominium. 50k as a flexible loan at 1.75% with PSD. I’ve never gotten money that fast :-o

Thanks for the answer. I cannot make special repayments on the bank loan. The plan was to quickly repay the KfW loan and to have the option of a special termination (after 10 years) of the bank loan with adjusted terms. Registered land charge 170k KfW loan - approx. 41k€ (would be possible to fully repay in January) Bank loan - approx. 83k - no special repayment possible The building plot will cost approx. 110-130k (+additional costs). Yes, there is a building obligation. We would want to build as quickly as possible anyway.

I cannot make special repayments on the bank loan.

Why actually not for an apartment from 2007? Is the loan newer than the apartment? After 10 years, you can cancel at any time, including partial amounts. You only have a 6-month notice period.

Why actually not for an apartment from 2007? Is the loan newer than the apartment?

Sorry, sorry - my big mistake. We acquired the apartment in 2011.