Equity with KfW loan

Hello,

is it generally common for banks to count KfW loans as equity? I have read this several times. If this is not usually the case, does anyone know a bank that considers this?

Thank you in advance.

Hello,

is it generally common among banks to count KfW loans as equity? I have read this several times. If this is not usually done, does anyone know a bank that takes this into account?

Thank you in advance.

Explain that to me, I am a layman.
How can a loan be equity?

I am unfortunately also a layperson - that is why I once "threw" the question into the forum here. I have read this many times.

ok, then I read it as some banks giving you the conditions for, for example, 100000, although you need a credit line of 200000, but you finance the missing amount via e.g. [KFW124] and [153]. Other banks simply take the conditions from you for 200000?! (The higher the credit line, usually the higher the interest rates they charge) If anyone sees an error in my thinking here, please correct me, I won’t be mad. Regarding your question: my bank gave me better conditions for the [KfW] than other banks. Direct quote from two financing advisors on the phone: "In the end, I cannot calculate better conditions for you, your offer from xy is currently the best." This is also mentioned in a report, just googled according to your information, and is the one with the TV commercial with the basketball player. I am so far satisfied with them, but they seem to want every little thing documented, it seems to me. Well, we can live with that.

This has to do with the loan-to-value ratio at the banks, not exclusively with the equity.

The calculation is primarily based on the risk for the bank. I will try to illustrate it with two examples.

- Total amount €500,000
- Equity in cash is €100,000
- Loan required €400,000

Case 1:
The borrower borrows the sum of €400,000 entirely from Bank XYZ.
Bank XYZ naturally wants to be first in the land register. Otherwise, in the worst case, there might be nothing at all.
- Bank calculates: €500,000
- minus €100,000
- leaving €400,000

This results in equity of 20% and a loan-to-value ratio of 80%. Accordingly, the terms of the loan are calculated. Bank XYZ therefore wants to get back the 80% (€400,000) in any case.

Case 2:
The borrower borrows €100,000 from KfW and €300,000 from Bank XYZ.
KfW is content for the time being to have second place in the land register. Bank XYZ wants and is again in first place. This way, Bank XYZ hopefully receives its €300,000 in case of emergency and does not care if KfW gets nothing.

Bank XYZ thus lends only 60%, so the loss is lower in the worst case, which may also affect the offered interest rate; KfW lends 20%.
The equity still remains 20% of the total amount.

...
Hope this makes it transparent.

I forgot, the calculation is somewhat simplified. Taking into account the construction and acquisition incidental costs, the calculation looks a bit different. The bank of course only considers the money that can be recovered upon resale in its calculations, which usually does not include the incidental construction costs.