Financing confirmation and conditions - experiences?

Hello everyone,

I am completely new to this great forum and have two questions regarding our financing, Volksbank, and financing confirmations.

We are planning to buy a house (not newly built). We have agreed with the seller, now it’s time for financing. Last Thursday we had the first meeting with the bank. We wanted to buy a house last year and had a financing commitment verbally when the seller sold to someone else. Well, no matter. At least last Thursday we already submitted all documents during the meeting; our advisor had already received all the documents for the house from us by email a week before. During the meeting, the financing was discussed roughly; the advisor told us it looked good and that he would create a financing plan.

Then on Tuesday we briefly went to the bank again where the advisor handed us the information documents about the mortgage loan (just information). On Wednesday, we received the financing plan from the bank with details about the financing - also about the individual interest rates. We signed nothing. On Wednesday we called the advisor again because we wanted to have a slightly higher repayment rate. During the call, we asked what would happen next. The seller’s agent (also a bank) reserved the house for us and wants to commission the notary after receiving the written financing commitment.

Our bank advisor said we should tell the agent to commission the notary. We were a bit stunned because, first, it all happened very quickly and, second, we haven’t signed anything yet. When we asked whether the financing could be confirmed, the bank advisor said: Yes.

Today I called him again and asked for a written financing confirmation; without it, we certainly won’t commission a notary and definitely won’t sign a purchase contract.

And now comes what makes me suspicious and gives me a bad feeling: The bank advisor is sending us the financing confirmation by email on Monday. We are then supposed to forward this to the agent so he can commission the notary. So far, so good. When I asked how it would continue with the loan agreement (we still have to provide proof of equity and a self-disclosure), the advisor said: "You now initiate everything so that the purchase contract can be made. As soon as we have the notary appointment, we will make an appointment for the following day to sign the loan agreement. We will only finalize the conditions then." When I asked why, the advisor said that if he finalized everything now and the purchase contract did not come about, we would be stuck with the loan.

I accepted that for now, but the longer I think about it, the stranger it seems to me. As long as we haven’t signed anything, we don’t have a loan hanging over us. And it should be possible beforehand to show us the loan agreement or at least agree on the exact conditions bindingly, right?

I want to know the exact conditions beforehand - and that before I sign the notarized purchase contract. Or am I completely wrong? I have also read that a financing confirmation is not always binding. How can I tell?

To clarify again: We have not signed anything and only received a financing concept. This contains the exact details about the financing (annuity loan including term, interest rate, fixed interest period, etc., and [KFW 124] with all details), but at the bottom it says: "The financing concept is non-binding and without obligation."

This means that I still don’t know today what the loan agreement will look like, which we, according to the bank advisor, only sign after the purchase contract is signed. This can’t be right, can it?

And no - we are not with any broker or loan shark, but with a Volksbank.

How does this usually work with financing at Volksbank? What was your experience? Can someone share?

If I now assume that we will sign the loan agreement earliest in three weeks (if the notary is commissioned on Monday, he will need a few days until the purchase contract draft is ready and then we have to have two weeks to review before the notary appointment for signing), the interest conditions will probably have changed if they are not “frozen” for us, right? The advisor always said that interest rates change daily. That means they can both improve and worsen in the meantime.

I feel completely stupid right now because I have no idea. My gut tells me this can’t be right, and I hope you can clarify this for me.

Many thanks in advance, desperate regards

Haustraum

Hello,
at that time with the financing it was like this for us: We received a written loan offer from the bank that was valid for exactly 10 days. Within this period, we could sign a loan agreement under the agreed conditions. However, we had already signed the house contract 3 weeks earlier.

Best regards
Sabine

Having a loan hanging over your head is not true, you have a 14-day right of withdrawal from the date of signing, this does not apply to the notary contract! I assume that they want to communicate the conditions only AFTER the notary appointment, so that you are forced to accept everything. After all, you have a house to pay for. I wouldn’t go along with that, but rather choose another financing broker.
As soon as the notary appointment is set, costs already arise for commissioning the notary, who also wants to see money for the draft purchase contract.
Maybe the Volksbank wants to add a bit to the currently lousy interest rates? As I said, have a look at another provider (I would recommend a broker, they often have one or two more tips and often select the bank specifically).
Oh, with us it was like this: first the financing was nailed down with a binding offer and shortly afterward the notary appointment was made. The notary contract was signed within the loan withdrawal period. You can do it the other way around as well, for example if it is agreed that the payment date for the house and the transfer of risk should only be in 3 months, but only if you can be sure to definitely get the money under the expected conditions.

I would, before you commission anyone with anything, demand a written financing confirmation including binding conditions from the bank. Nothing more, nothing less. A two-liner is enough: "We are prepared to provide you with a loan of 250,000 EUR at 1.23% interest and 2.34% repayment." The details and contracts can be drawn up afterwards, if need be.

You can't be that stupid to conclude a purchase contract without money backing it.

When I asked why, the advisor said that if he prepares everything now and the purchase contract does not come about, we would be stuck with the loan.

And because of this statement, the advisor should be tarred and feathered for giving bad advice and your bank connection completely terminated. What kind of nonsense is that in times of the right of withdrawal for loan agreements? I mean, that has not only existed since 21.03.

1. You have a right of withdrawal for the loan, so you can also secure everything in advance. 2. Financing confirmations incur costs or require equity backing at the bank. That is why some banks do not issue concrete financing confirmations (we also only do so if the customer bears the cost). 3. Condition reservations are also becoming less common. In the Volksbanken segment, for example, there are institutions that determine the conditions only on the day of signing (like we do). Interest rates can develop both negatively and positively for you. I would not rely on the mere word of the banker!!! Just tell him that there is no purchase without financing and look for a second bank in parallel.

Rarely have I read something so stupid! You have absolutely nothing in hand that you will be financed and risk that the Volksbank says 3% interest. And then? I would submit the whole thing to a broker and compare conditions.