Equity contribution for construction financing

The kitchen should not be included in the amount you indicated as equity contribution. If all the money you indicated as equity contribution is gone, there should still be money left for the kitchen.

The layperson makes a list of all the costs they expect and what capital is available. The financer then picks out the items relevant for the lending value determination and deducts the irrelevant items from the equity.

The layman, however, makes a list of all the costs he expects and what capital is available. The financier then picks out the items relevant for the determination of the loan-to-value ratio and deducts the irrelevant items from the equity.

Correct. And depending on which bank you are with, they handle the process differently afterwards. Our bank (Volksbank) did not include the kitchen in the loan-to-value ratio but did include it in the available equity. They want to see the entire equity planned for the construction spent first before credit components are used. In the end, however, it does not matter at all – you have a total sum of equity and loan, and from this sum, all invoices have to be paid.

I can't really say more about that because we initially financed much more from equity than we declared as equity, and afterwards we simply recovered the money from the loan with the largest invoices. The clerk at the Sparkasse was incredibly relaxed about that. With 100% or 110% financing, that is probably not so easy.

We only finance 90%...

The devil is in the details.

A kitchen and the ancillary costs do not increase the value of the house and are therefore not included in the loan-to-value ratio.

The loan-to-value ratio here would be:
296,812€ construction costs house
71,110€ purchase price land
20,000€ outdoor facilities
52,000€ ancillary construction costs
15,000€ kitchen
2,489€ property transfer tax
1,422€ notary
Total: 458,833€
Equity used: 64,000€
Financing requirement: 394,833€

439,922 value of the house
394,833 loan
Loan-to-value ratio 89.75%

I would withhold the equity for ancillary costs and kitchen. There is often trouble when paying out the kitchen.

Okay then we will keep that back! Yes, the loan-to-value ratio is correct, the financial advisor wanted to get below 90% because of the better conditions..