BungaSeppel
2024-11-06 13:02:30
- #1
Having to "spend equity first" belongs to Alg II, but not in construction financing. Equity should serve agility. Having to spend it first would also be totally counterproductive because you mainly need it "later in the timeline." Nobody does garden work and buys a kitchen before laying the foundation.
Garden work and kitchen do not run through construction financing anyway. In our case, Interhyp and the three banks we contacted directly agreed on this. A kitchen and some flowers in the garden (I know, I exaggerate with the latter, but that is the basic mindset of the banks) probably do not increase their security in case of default.
I think you are confusing official equity (which definitely counts towards the investment sum, proof of existence must be provided) with cash, which you later need for private stuff like kitchen, new furniture, etc., which the bank does not care about. The real equity must flow into things that officially increase the value of the house afterwards.
In our final chosen loan, it was explicitly a feature that 50% of the official equity could be spent last. In all other loans, this money would have been used first. The principle is also understandable: the banks want your house to be worth more at any time than the amount you owe them. If you are allowed to spend your equity last, but meanwhile squander it and then go bankrupt with a half-finished house, the bank is at risk.