Financing a plot of land with later house construction

Hello everyone,

first of all, I would like to thank you for the many informative posts. Now to my concern:

We (not married) would like to buy a building plot from my uncle.

Purchase price: 105,000€
Reference value approx. 147,000€

My finances:
Equity: 70,000€
Salary: 2,250€ net (public service, permanent)
No ongoing loans/debts

Finances of my girlfriend:
Equity: 0€
Salary: 2,100€ net (pharmaceutical industry, permanent)
Ongoing loan for an apartment totaling 45,000€ (term since 10/2014, monthly payment 450€)

The wedding is planned for this or next year. The construction of a house (own use) is to take place within the next 1-3 years.

Which financing option would be the most sensible? From my point of view, an installment loan or a variable loan would be possible.

Would creditworthiness be a problem with an installment loan for a later construction financing?

Who should take out the loan? Both or only one person?

I am grateful for any ideas or suggestions.

Best regards
Thommy

The lower purchase price has a negative effect on the calculation of the equity portion or the lending value of the bank.

Unfortunately, this can only be avoided if the benchmark price is paid, right? The sales value is certainly another €50,000 higher (compared to other offers).

For the bank, the purchase price is usually initially the market value. It normally does not conduct an independent valuation for private real estate loans. Of course, one could try to have an appraisal made and presented.

Doesn't one also have to be careful tax-wise that a sale with a 50% discount on the market value (or more?) is considered a partial gift?

Hello,

it was similar for us.
We first bought a piece of land. We were still missing almost 20,000 euros for the purchase price payment. We covered this with an installment loan that can be repaid at any time.
With the now upcoming payout of the construction loan, this will be repaid immediately as the first thing.
Flexibility to be able to repay the loan at any time was important to us, hence the choice of the installment loan. In addition, you initially save yourself the registration of a land charge.

Best regards

: The gift issue obviously has to be taken into account and gift tax may possibly be due. But I don't think there's any other way, right?

: The mortgage charge is of course an argument for the installment loan. Did you have to pay a prepayment penalty?

Best regards & thanks for the quick answers