Finance kitchen or furniture through equity / debt capital?

Hello,

we have obtained offers from several banks and found that some banks, for example, add the kitchen to the loan or subtract it from the equity. I have read elsewhere that it does not make a difference... but is that really the case?

Example 1: Kitchen is added to the loan
Loan: 290,000 (house construction) + 10,000 (kitchen) = 300,000
Equity: 60,000
Equity ratio = 60,000 / 300,000 = 20%

Example 2: Kitchen is subtracted from the equity
Loan: 290,000 (house construction)
Equity: 60,000 - 10,000 (kitchen) = 50,000
Equity ratio = 50,000 / 290,000 = 17%

Am I making a mistake? Why is this handled differently by the banks?

Yes, error in reasoning.

The loan-to-value ratio is in both cases 240,000/290,000=x%

Yes, error in reasoning.

The loan-to-value ratio is in both cases 240,000/290,000=x%

Not 290,000/340,000=x%?

Not 290,000/340,000=x%?

The example is not clear on this.

According to the labeling, the 290K€ is the loan. Then your calculation would of course be correct.
But try in the first example

Loan: 290,000 (house construction) + 10,000 (kitchen) = 300,000
Equity: 60,000

to arrive at a 340K€ lending value.

From the calculation and the compilation of the figures, Tox’s statement is more likely to be correct. In that case, the 290K€ would be the house construction costs and the total costs 300K€. That would at least somewhat correspond with the calculation of the equity ratio.

Sorry, I was indeed on the wrong track. But still... at the end of the day, nothing changes in all variants with the same costs and the same equity investment.... nothing.

That was also explained to us that way. The €10,000 for the kitchen no longer officially appear anywhere for the bank. (The value of the kitchen is also not included in the property value)