From Rent-to-Own to Construction Financing 40 / 60% Financing Recommended?!

Hello!

A year ago, we "acquired" a house that was offered to us as a rent-to-own.
Since September 2012, we have been paying the total amount of nearly €70,000 in monthly installments of €680.
Because the house needs renovation, we do not live in it yet; we are practically paying for a rental apartment
and the installments for the house at the same time. We aim to move in by March next year.

Now, the problem is that it is not so easy for us to get a loan to fully buy the house from the owner
and to cover the renovation/refurbishment costs.

Our professional situation: I have been self-employed since 2008, my girlfriend was on parental leave until March this year
and has been permanently employed with me since then.
A possible loan would probably only be possible through her...

We have now consulted a mortgage advisor about our options.
He suggests aiming for a 40 / 60 % financing. 40 % equity and 60 % loan.
Allegedly, no income verification would be required (which, of course, we do have, but as mentioned,
we both work at the same company).

So far, we have found nothing about this on the internet; can you say something about it?
We also gladly accept tips and recommendations!

A financing without income proof is about as credible as the rheumatism blanket on a won coffee trip.
If your self-employment is running properly and you can show a profit on paper and not just in your wallet, or if the salary of your girlfriend is earned, a mortgage financing can also be obtained without any problems. Of course, equity capital should also be available here.
What does your house bank say, where you also have your business account (Sparkasse/Volksbank)? What is your economic situation, what does a possible financing structure desired by you look like?

We had almost suspected something like that, although we were sure that we could classify the building society he works for as reputable. Well :rolleyes:

Our assessment is that we will probably not get a loan from the house bank (Volksbank), since they understandably want to see the tax assessments. However, only the last one shows a profit, as I invested a lot in purchasing my business equipment during the first years of my self-employment. In addition, there is a car loan, a subsidized loan,... to be honest, I don't expect high chances there :confused:

The offer with the hire purchase also suited us very well. From our side, it could continue like this, but the former owner mentioned that he would prefer if the house could be paid off in one lump sum now. (He is no longer the youngest, which is understandable). We have paid about 28,000 so far with down payment + all installments. It would be optimal for us if, thanks to a loan, we could move into the house sooner and use the 600 € that currently goes for the rental apartment for a loan.

Perhaps an independent financial advisor would be more appropriate here ... although personally, I wouldn't really have much hope that it will work. But it's definitely worth a try.

The €28,000 that has been paid is pure repayment? So €70,000 - €28,000?

What does the renovation cost? Or if it is already underway, what is it being paid from? The money has to be there already, right?

That would mean to me that you still have to pay €42,000 for the house - is that understood correctly?
With a financing requirement of 60%, that is €25,200 from the bank. The rest is equity. Where does that come from, is it even there?

If yes, it could be assumed that an agreement with the seller can be reached.
Give the 40% (that is €16,800) as equity to the seller instead of the bank as proof. And upon moving in, instead of €680/month, add the tenant savings on top. That makes €1,280/month.
A burden that you currently already have.

That is - even if the seller is no spring chicken anymore - a nice sum and in €42,000 / €1,280 = ~33 months he would have the complete money.

Otherwise, you can also simply say, contract is contract. If the seller agrees to a lease-purchase, he cannot come six months later and say: "My biological clock is ticking, I need the full money now". I mean, he wasn’t that much younger in September either to not have noticed that back then.

For you, taking out a loan would probably be much more expensive, I assume.
I wouldn’t stress about it at all.