Financing building plot in a central location

2019-10-02 13:05:42

Hello everyone,

we are about to have the notary appointment for the purchase of a plot of land.
It is a plot of about 600 sqm in a newly developing residential area. Land fully developed.
Sewer contributions have already been paid to the city by the original owner.

Buy the land directly with equity or rather finance it, for example through a variable loan?
Afterwards, we would talk to architects etc.

Do you have any tips?

What would you recommend to us?

best regards &

2019-10-02 13:23:58

Numbers and plan in peace.

2019-10-02 13:36:06

If possible, I would also pay for it out of equity. You then have the property as equity accordingly, of course it would be good if there is still some equity kept in reserve.

2019-10-02 14:59:10

If equity is available, then buy immediately. The time until construction begins can be prolonged and you would already have to pay interest on the drawn portion and would notice during the planning phase that the original loan amount was completely incorrectly estimated. All avoidable. Later, the bank also values the 90K€ property in your possession as 90K€ cash in your account, provided it is not an absurdly inflated purchase price of the property and the value is actually lower.

2019-10-02 17:36:09

Hi Piotr,

so pay for the land with equity. Thus, no land charge is registered in the land register yet.

Important:
look at the standard land values and what you are paying.

because if the land is worth 150,000 EUR at the bank and you pay 200,000 EUR for it, then the bank will only take the 150,000 EUR value (equity) for the financing calculation.
UNLESS: you do the house financing within the next 3-6 months (because then the bank may take the purchase price from the purchase contract).

As I said: this makes sense if the difference between value and price is very large. (so here it is advisable to do the financing quickly).

if the price/value is not that far apart, then you have more time and can plan relaxed.

2019-10-03 05:07:56

Hi Piotr,

so pay for the plot with equity. Thus, no land charge is registered in the land register yet.

So best to pay with equity and then it’s settled? Did I understand you correctly?

Important:
look at the standard land values and what you are paying.

Standard land value according to Boris: 170 Euro
Actual value: 220 Euro
Does that difference fit?

Because if the plot is worth 150,000 EUR at the bank and you pay 200,000 EUR for it, then the bank will only take the 150,000 EUR value (equity) for the financing calculation.
Unless: you do the house financing within the next 3-6 months (because then the bank is allowed to take the purchase price from the purchase contract).

As I said: it makes sense if the difference between value and price is very wide. (so here it is recommended to do the financing quickly).

Why 3-6 months? Certain reasons?
Do you mean this case for financing or also for the circumstance when it is paid via equity?

If the price/value are not that far apart, then you have more time and can plan relaxed.

Similar topics
04.11.2009	Taking a loan for equity financing?	19
28.03.2011	Can we afford to build a house without equity?	14
07.07.2011	Financing land now, house in 6 months?	17
20.07.2011	House construction: Equity / incidental construction costs realistic?	14
03.04.2012	Buying a house without equity?	29
25.03.2012	Land now - house construction next year	23
30.04.2012	No equity, good income, financing feasible?	22
31.05.2012	Financing of the property: Does the entire financing need to be secured?	11
04.09.2012	Land paid - Building with an additional loan?	16
19.03.2013	General questions about equity and construction costs	10
03.06.2013	Buying land from father - building a house yes or no?	11
22.08.2013	Plot - Decision?	14
29.08.2013	Calculate equity and financing	12
21.02.2015	Impacts on loan when equity is in property	17
10.04.2016	Property as equity? Living costs with children?	19
21.04.2016	Is financing with land and equity possible like this?	20
11.03.2020	Land as equity capital - Worth the wait?	10
05.08.2020	Financing without equity except for land - Bavaria	13
06.03.2023	Pledge existing property to increase equity?	13

Financing building plot in a central location

Piotr1981

Joedreck

cschiko

Mottenhausen

Hyponex

Piotr1981