Financing - first bank has declined

Your bank is saying you’re not allowed to build a Beverly Hills house in the Bronx???

I actually just want a really good solid house with a basement and the price is unfortunately a bit higher there. We are 5 people, so you need space. You can probably see it the way you say, but I would first wait for the answers from the other banks to give a clear YES here. Without financing, we cannot build. Without financing, I will not sign a house contract. At the moment, everything is paid with equity, but it would still be a real shame if it doesn’t work out.

I actually just want a really good solid house with a basement and unfortunately the price is a bit higher there. We are 5 people, so you need space. You can probably see it the way you say, but I would wait for the answers from the other banks before giving a clear YES here. We can't build without financing. I won't sign a house contract without financing. At the moment everything is paid with equity, but it would still be a real shame if it doesn't work out.

That will definitely work. Many forum members have already said here that they received a rejection from the first bank. We did too back then (because of residency status). Another bank did it anyway. So in a way, we are currently building a Beverly Hills house in the Bronx here, but in the end someone financed it for us too. Fingers crossed for you.

Was there previously a "butter-soft" commitment, like "we can definitely manage the super favorable conditions"? To me, that sounds like DSL Bank. If that's the case, please google for experiences; offering a low interest rate first and then rejecting the application shortly before seems to be a business model. That also happened to a good friend shortly before the notary appointment. For me, an inquiry at KSK, whose customer I am otherwise NOT, led to success after I mentioned the conditions of other banks. With a very small surcharge, I had a very well available contact person and everything worked down to the minute.

As far as I know, the bank assesses the resale value, the are significantly higher though. , incidental construction costs, etc. are not included in the bank's assessment.

Wrong information. In a property valuation, the land value and flat-rate incidental construction costs are of course included in the valuation. “etc.” does not exist; at most there are value-increasing (or value-reducing) components, depreciation or garage and outdoor facilities, etc.

The ECB will raise interest rates again on 15.03, if I get the information on 23.03 that both banks reject [me], I will be in trouble.

The ECB’s key interest rates are short-term refinancing and deposit rates for banks. They have no direct influence on banks’ long-term refinancing on the capital market. There were several months last year of significantly falling interest rates while the ECB simultaneously raised rates significantly.

It is generally a problem to place an expensive, high-quality house out in the middle of nowhere. You have to accept that the house will be like a new car – 30% loss in value upon moving in.

Yep. This is called (also available from the expert committee) the market adjustment factor. In plain English: it is a specialty property. And there are exactly two possibilities. 1. Sell below production costs or 2. Find exactly the one fool who absolutely wants exactly this house in this location.

So your bank thinks you are not allowed to build a Beverly Hills house in the Bronx???

You are allowed, but they want to have the risk compensated with only a small loan or a high equity contribution.

The ECB’s key interest rates are short-term refinancing and deposit rates for banks. They have no direct influence on banks’ long-term refinancing in the capital market. Last year, there were several months of significantly falling interest rates, while the ECB was raising rates substantially in parallel.

They are allowed to, but they want to be compensated for the risk with only a small financing amount or high equity.

Isn’t that controlled by the EURIBOR interest rate?

The first bank declined immediately without asking any questions, probably because they simply don’t want to. Today, the financial advisor called me, and there are questions regarding my financing; I think that is already a positive sign.

Isn't that controlled by the EURIBOR interest rate?

No. The Euribor is a completely different rate. It is the rate at which banks lend money to each other on a short-term basis. The best known is the 3-month Euribor, which is mostly also used as a reference interest rate for "variable" financing.

Long-term refinancing for banks (for real estate loans) is, for example, covered bonds (for mortgage loan portions). So neither the ECB nor the Euribor.