Finance land/house separately - fixed interest rate

Take a variable home loan. The loan then runs without a fixed interest rate period and you can make as many special repayments as you want every six months at the interest adjustment dates, not just 5%.

Does the bank want an entry in the land register with such a loan? For such short-term loans, this should be avoided, otherwise there will be additional costs for the entry, notary, and cancellation.

Does the bank want an entry in the land register with such a loan?

Of course they want an entry in the land register. No security, no money.

With such short-term loans, this should be avoided, otherwise additional costs for the registration, notary, and cancellation will arise.

Usually, you go straight into the land register with the expected volume. Often, you also have the loan with the same banking partner, since you approach the whole thing as one project.

The costs for this process are significantly cheaper than if a VFE had to pay, or if the loan for the house itself becomes significantly more expensive.

Does the bank want an entry in the land register with such a loan? With such short-term loans, this should be avoided, otherwise, there will be additional costs for the registration, notary, and cancellation.

Yes, the bank wants an entry in the land register.

I had to finance the property flexibly a) because the municipality set a deadline and b) because the total construction costs were not yet fixed. How else, it is mostly purchased without the property being surveyed or developed. (classic new development area)

Of course, I may now have to pay for the cancellation and new entry, but to stay practical, if I had signed a total construction financing this January (the property is still neither developed nor surveyed), I would probably have to pay provision interest for the next 12 months. Try that for 2 months with the full amount. That can happen faster than one likes, for example, if the municipality is slow.

What do you prefer?

Another advantage is that you can quickly get the property free of charges. My property is now 80% paid off and it looks like it will be free of charges by the end of the year and go into the financing as equity.

Definitely better than taking out €520k at once, right?

Can I still go back to my original question? It all seems a bit too simple to me. Is it really like that? I borrow the money for the property from the bank now, fix my interest rate for 2 years. During the 2 years, I pay my installments monthly, normally with the interest rate of 1.34 and the repayment. And after 2 years, I can simply terminate this loan, pay my remaining debt, which I then include in a possible new loan, and everything is fine? Without costs? As a calculation example: The property costs 70,000, I have repaid 10,000 in those 2 years, then I just pay them the 60,000 back and that’s it? I feel like I’m missing the catch.

No cost?

Possibly deletion of the existing land charge, as well as new registration (although to be fair, this can only be counted as "double" payment for the land amount for the property)

The whole thing seems a bit too simple to me. Is it really like that? I now borrow the money for the land from the bank, fix my interest rates for 2 years. I

Well, there is a risk that the capital market will develop in such a way that in 2 years your plan will be difficult to impossible (higher interest rate than today).

The problem I see is if you want to bring forward the construction or realize it later. 2 years are just 2 years.

Possible deletion of the existing land charge, as well as new registration (although here, to be fair, it can only be counted as "double" payment for the amount of the land for the property)


Well, there is a risk that the capital market will develop in such a way that your project might be difficult to impossible in 2 years (higher interest rate than today).

The problem I see is if you want to bring forward the construction or realize it later. 2 years are simply 2 years.

I totally agree with you. That could erase any financial advantage for you. You have to have strong nerves if the interest rate goes up. I have been waiting for 9 months now to be able to start the house financing in 4 months. Every KfW interest rate adjustment so far has been an increase and the ECB is also imminent with the key interest rate adjustment.