Financing of purchase and renovation

2019-06-25 09:20:55

Hello, for your own safety, you should have not only rough but very precise cost estimates for the renovation. How do you arrive at "approximately" 240k? Has a specialist already been involved?

There will neither be enough time for good cost estimates, nor can you send multiple craftsmen through the property.

An architect is needed here to estimate it. Many banks specifically require this signed estimate from a specialist, especially for such a large amount.

2019-06-25 09:23:35

Oh yes, as an alternative to the KFW loan, you can also take the KfW Sanierungszuschuss 430. You apply for it just like the 455-E after the purchase.

2019-06-25 10:06:13

It is rather unfortunate to disregard value-enhancing modernizations and renovations, as these increase the value of the property and thus, by using equity capital, reduce the loan-to-value ratio. I would always recommend making the bank aware of the measures when purchasing the property and applying for the financing holistically.

One option is to estimate the costs roughly / have them estimated and to borrow a little more, build in a buffer, and choose a bank that accepts a non-utilization amount, meaning that parts of the loan do not have to be drawn without incurring a non-utilization compensation.

It is also possible to consider less equity capital in order to be able to react flexibly to additional costs and to reduce the loan, the principal, at the end of the construction period by using any surplus as a special repayment.

In principle, the following questions arise:

1) How accurate is your cost estimate?
2) Are the services to be performed by tradesmen sufficiently clear?
3) Is there no construction expert or architect available in the vicinity?

If a builder is clear about the costs, or has certainty, or includes this in the loan, then our in-house architect will prepare a cost breakdown free of charge that banks will accept. But just by the way.

2019-06-25 13:01:00

Thank you very much for your answers so far. As you can see, opinions differ somewhat here as well. However, I am now also inclined to take on financing and then obtain a cost estimate from a building surveyor/architect.

The reason why we only have rough estimates so far is due to the following circumstance (very individual situation): two weeks ago, we reached a verbal agreement on the price with the realtor and received a verbal commitment. The realtor wanted a written declaration of intent to purchase. We were only able to make the appointment for this 10 days later due to vacation. So we met, spent 1 1/2 hours there, filled out and signed various documents (including one for a financing offer from Kreissparkasse). At the very end of the procedure, we were told that during our absence, a second interested party had also signed a declaration of intent to purchase and was therefore in first place.

We were completely taken aback – we did not expect that. It is nonsensical in any case, since the clause mentions a binding reservation and "purchase activities are suspended." However, it is unclear what this declaration is ultimately worth and whether the realtor was just bluffing in the end to raise the price or buy more time.

Long story short: I cannot possibly invest a few hundred euros in a building surveyor if I do not yet have a fixed commitment for the property. Nevertheless, the question of how to proceed would also be relevant for another property in the future. In this respect, I am grateful for your answers.

2019-06-25 13:38:16

Thank you very much for your answers so far. As you can see, opinions differ somewhat here as well. However, I am now also tending to take on financing and then obtain a cost estimate from a building surveyor/architect for this purpose.

The reason why we only have rough estimates so far is due to the following circumstance (a very individual situation): two weeks ago we reached an oral agreement on the price with the broker and received a verbal commitment. The broker wanted a written declaration of intent to purchase. We could only attend the appointment 10 days later due to vacation. So we met there, spent 1 1/2 hours, filled out and signed various documents (including one for a financing offer from the Kreissparkasse). At the very end of the procedure, we were told that during our absence a second interested party had also signed a declaration of intent to purchase and was therefore in first place.

We were completely taken aback – we had not expected that. Nonsensical in any case, since the clause mentions a binding reservation and that "purchase activities are stopped." However, it is unclear what this declaration is ultimately worth and whether the broker was bluffing in the end to increase the price or gain more time.

Long story short: I absolutely cannot now invest a few hundred euros in a building surveyor if I do not yet have a firm commitment for the property. Nevertheless, the question of how to proceed would also be relevant for another property in the future. In this respect, I am grateful for your answers.

I have to intervene here because when selecting an experienced financing broker, you do not need cost estimates; a list of intended measures indicating the trades involved and the possible costs is sufficient.

For such cases, we have our in-house architect who prepares and signs the list, and this list alone is sufficient due to submission through us to all banks.

I mention this because it repeatedly happens that this issue arises with brokers and does not have to lead to difficulties.

2019-06-25 14:17:33

Long story short: I simply cannot invest a few hundred euros in a building surveyor if I don't yet have a firm commitment for the property. Nevertheless, the question of how to proceed would also be relevant for another property in the future. In this respect, I am grateful for your answers.

Am I correct in understanding that you still don't know WHAT exactly you need to renovate? Tell us a bit about the property, maybe we can help. Typical reference points are, of course, the year of construction and when the last renovations took place.

If you can roughly name the trades involved, Noelmaxim's approach would be sufficient to estimate and document the costs.

You generally never have time for real offers, since you will wait weeks for them.

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Financing of purchase and renovation

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