Finance the land or pay in cash?

Hello everyone,

I just registered in the forum because we might want to buy a plot of land in a new development area in the near future. So far, I have only been reading along a bit here.
The sale of the plots will probably not start until in two months, and construction can presumably only begin sometime in 2021, but I want to inform myself as early as possible about all relevant options in order to be able to act quickly if necessary.

The plots that would be an option for us will probably cost between 250K and 300K euros.
(Prices between 350 and 390€/sqm)
We plan to build a house on it, which may cost 700K euros including all ancillary costs.

Now to my question regarding financing:

Our equity amounts to about 450K euros, of which we would put 400K into the financing.

When I simulate financing on the Interhyp website, the calculator spits out an interest rate that is 0.5% higher when I indicate that I already own the plot (in our case cash purchase plot + 100K equity).
If I indicate that I am financing both the plot and the house and contribute the 400K equity, better interest rates are shown.

Could it be a disadvantage to contribute a plot of land as equity instead of money?
Or is this a wrong calculation in the online calculator?
Because 1% or 1.5% is already a difference.

I am curious about your explanations and opinions.

Best regards
Phil

If you acquire the property through a loan, this bank is registered as the first rank. Then you would also have to get the mortgage from this bank or pay significant surcharges at a second bank. It is best to use the equity now. Why should you pay interest on the property if you have the equity in the bank, possibly even with penalty interest?

If you take the property with a loan, this bank is registered in the first rank. Then you would also have to get the mortgage from this bank or pay significant surcharges at a second bank. It is best to use the equity capital now. Why should you also pay interest for the property if you have the equity capital in the bank, possibly even with negative interest rates

Not quite, you could finance it variably. But it only makes sense to me if the return on the equity capital is higher than the interim financing. So in this specific case, I would pay in cash. There is still enough liquidity left. Income matches the financing?

Thanks already for the input. I actually also thought that it makes more sense to use the equity for the purchase of the land.

We have not yet had contact with any bank or financial advisor, but from the feeling it should be feasible to finance an amount of that size. We are 36 and 39 years old, no children (not planned either), debt-free. Household income currently between 9000 and 10000 euros per month.

We could also imagine buying an existing property, but the market is swept clean and we are relatively demanding. Therefore, building probably makes sense, even though I could not imagine it before.

I have no concerns about the income

Could it be a disadvantage if you contribute land instead of money as equity?
Or is this a miscalculation in the online calculator?
Because 1% or 1.5% is quite a difference.

I just played around a bit with the calculator and was also able to notice this difference.

Does anyone have an explanation for this?