Finance the property, construction starting in 2 years. How to finance?

Would you put the equity into the land or rather keep it ready for the construction?

I would bring in as much equity as possible now. Where else can you get 5.65% interest after tax? That is the cheapest option. Only hold back as much equity as you need later in cash and what cannot be financed through the bank. A kitchen, for example.

I just don’t want to have to refinance later if something big and unforeseen happens and the amount is no longer sufficient. That’s why I imagined the special repayment with any surplus after the end of construction as the safer option.

But this on the one hand leads to a higher interest rate. Very expensive over the years! The repayment is also mathematically higher since the percentage rate refers to a higher starting volume. Of course, you can set it lower if you are not yet at the lower end.

Hello,
we currently have the same issue and have thought a lot about it.
Basically, it would be possible to pay the purchase price & additional costs from equity, as a second-ranking debt ties you to a bank. That would also have been the only sensible way for us. We want to sign the house construction financing in the summer and expect rising interest rates.
BUT: maybe you also have the option: there is another house in the family that does not belong to us and has a market value of about 500k. Of that, 100k is outstanding debt. We will now finance the land through this house at about 3.91% for 15 years. This secures us a low interest rate now for a large part of the total costs without mortgaging the land and without touching the equity, so that we have to borrow correspondingly less in 6 months at the expected higher interest rates.
Everyone must decide this approach for themselves... family/options/agreements etc...

I believe the entire situation can only be really assessed in a balanced way if you provide all the details:

What does the plot including additional costs cost (you already added that), how much equity do you have, how much can you repay in the time until construction starts, and how much buffer can you build up simultaneously for the house construction?

It might also be interesting to push the whole project through immediately (at least tackle contracts with GU or something similar) – waiting currently has a very, very high price ... and a project that seems feasible today can become impossible in 3 years. If that is really not doable at all for private reasons, then of course it makes no sense ... but I would think about it very carefully. It also depends on the extent to which you want/can do the work yourselves.

As already mentioned, the purchase price is 195,000 + 8.5% ancillary costs = 211,575€.
Currently, 100K€ of equity capital is available. The house bank spoke of a total volume (including equity capital) of 600-700K€ based on current income and healthy financing.

Reserves of 30,000€ / year (partner on parental leave considered) can be built up, but the respective financing of the land is then deducted from this. So with a 1,000€ installment = 18,000€ left. It would of course be nice if more could be saved, but I don't want to plan that in firmly.

So, as already mentioned, the purchase price is 195,000 + 8.5% incidental costs = 211,575€. Currently, 100K€ equity is available. The main bank spoke of a total volume (including equity) of 600-700K€ based on current income and a healthy financing. Reserves of 30,000€ / year (partner on parental leave considered) can be built up, but the respective financing of the land must then be deducted from this. So with a 1,000€ installment = 18,000€ remaining. If more can be saved, of course, that’s nice, but I don’t want to plan that as fixed.

Then calculated from the other side: Total volume including equity 700k € - Equity today 100k € - Land 212k € = approx. 390k € budget for house + incidental building costs + furniture + kitchen etc. Did I understand that correctly, or could I be misinterpreting it? If that’s the case, that is not much for an all-in house build nowadays. Then it first looks as if you will not be able to fully pay off the land before the start of construction. I would definitely go for the variable loan then. That way, you have relatively free choice of bank for the overall financing. A 15-year fixed interest rate or something similar would personally be ruled out at first glance. My tip would be to get advice from a reasonable financial advisor. They can calculate that relatively easily for you.

Reserves can be built up at €30,000/year (partner on parental leave taken into account)

If that much money is left over in the end, and that despite parental leave, I would invest as much equity as possible now in the property. Equity rebuilds quickly and even additional financing won’t break your neck. You can afford it.