Fix financing early – no room for negotiation with the home builder?

I recently read that interest rates have dropped a bit. So everything is still open for you: they could have fallen in a month. So: wait and see! …on the course of life ;)

Another increase in the key interest rate is expected on September 8th. The interest rate will likely rise again. Therefore, the stress for me to finalize the financing is increasing...

I think I will go through the various cost items again with my house builder using a checklist to verify whether all costs are actually included in the cost breakdown. My problem is that the construction contract has not yet been legally reviewed, which I will probably not manage before September 8th. Therefore, it would be a risk to sign the financing before the contract negotiation...

Another interest rate hike is expected on September 8th. The interest rate will probably rise again. Therefore, my stress is now increasing to finalize the financing...

I think I will go through the various cost items again with my builder using a checklist to check whether all costs are actually included in the cost statement. My problem is that the construction contract has not yet been legally reviewed, but I will probably not manage to do this by September 8th. Therefore, it would be a risk to sign the financing before the contract negotiation...

Very risky. The question is to what extent the builder is responsible for incidental house costs. These include things like:
- Construction electricity
- Construction water
- Rental of construction electricity box
- Energy efficiency consultant
- Insurances
- Construction site access
- Any house connections
- External construction supervisor (hope you will hire one, otherwise negligent)
- Drainage
- Crane site??

And then don’t forget to include a buffer for selections. What if you want a second outdoor water tap or water/electricity in the garden? A high-voltage cable for the wallbox. Sanitary installations are always a very large cost item or tile work.

I have hidden a buffer of about €20,000 in the bank financing overall because I knew that something would still come up. In addition, almost €60,000 equity, of which probably about €15,000 will remain.

Another increase in the key interest rate is expected by September 8th. So the interest rate will probably rise again. Therefore, my stress to finalize the financing is increasing...

No, the key interest rate has virtually no impact on long-term refinancing, as banks almost never obtain money from the ECB for construction financing. The construction interest rate also always anticipates the key interest rate increase. In this respect, the key interest rate increases announced since spring are already included in the price.

My problem is that the construction contract has not yet been legally reviewed,

Why should it be legally reviewed?
That is your personal matter if you have it checked by an expert; it has little to do with the financing.

The 10y bond swap, which is often taken here as an indicator for the general trend of construction loan interest rates (because roughly that's how banks refinance themselves or something), has risen quite noticeably again since the beginning of the month. (About 15%) (Still significantly below the levels of mid-June, but slowly noticeably rising again), so we are currently restless (and dissatisfied with our property developer, who is also continuing to delay, even though we know that is partly due to the somewhat slow-moving city). So yes, so far interest rates have rather decreased again a bit, but I think for the moment that’s settled for now. However, I wouldn’t want to make any longer-term forecasts, no idea what it will look like in a month... With the key interest rate hikes it’s weird anyway. After the last one, even though it was higher than previously announced, construction loan interest rates began to fall shortly afterward. So it does not really correlate strongly for now...

I can’t really give a tip. Our property developer is aiming for a contract conclusion in September (but well, he also once aimed for August and it’s already clear that won’t happen) and our plan now is slowly to start asking banks for terms and then to actually send out a concrete loan application. It takes a while for that to be processed and we have the faint hope that we might actually have a notary appointment on the horizon. Ideally, we would get into the two-week window (i.e. finalizing financing <14 days before the notary contract with the developer), because if something spontaneously goes wrong, we could still call back. Whether that really works out, we’ll see...

For fun, we once checked theoretically what a prepayment penalty would be if we had financing but no house construction took place, and at least the rough estimate in an online calculator currently spit out something in the 100k range (with a 475k loan amount). I’ve partly read that banks sometimes settle for less or agree to a pledge swap (different object) without extra costs, but that seems to depend somewhat on the goodwill of the bank (which we are not really eager about...). No idea whether you can partly negotiate clauses into the loan contract with the bank for that, but we are too inexperienced for that.

For us, of course, the whole framework would change if the property developer project doesn’t work out (since we don’t even have a plot of land yet). So maybe something else again...

Why should it be legally reviewed?
That’s your personal matter if you have it checked by an expert, it has little to do with the financing.

I meant it differently. I actually don’t want to sign yet before I have the contract legally reviewed. In the end, I might have financing, but I can’t in good conscience sign the contract because it disadvantages me so much...

We once jokingly checked what a prepayment penalty would theoretically be if we had financing but no house construction happened, and at least a rough calculation in an online calculator currently spit out something in the 100k range (for a loan amount of 475k). I have partly read that banks sometimes settle for less or agree to a collateral swap (different property) without extra costs, but that seems to depend a bit on the goodwill of the bank (which we’re not very keen on...). No idea if you can partly negotiate clauses in the credit contract with the bank for this, but we’re not involved enough for that.

That would of course be a disaster... I’m increasingly tending to wait with the financing and clarify everything first. In the end, the municipality could also veto the building application and you have to redesign the whole house. Then the bank won’t be happy either.