From when does the financing start at the handover of the house in summer 2017?

Hello, I haven’t been here for quite a while. We had already planned extensively for the purchase of a plot of land and the construction of a single-family house through a developer when the purchase of the plot unexpectedly fell through for us at the very last second. That was a lesson for life, but it was just how it went.

Now, quite a bit has happened in the past few weeks. We viewed a house last weekend, immediately had an extremely good gut feeling, after a short period of consideration agreed to it, and actually received the contract - which is extremely difficult here in the region and we are very happy. We did not expect anything to work out so quickly for us and are still somewhat at a loss as to what all needs to be considered.

The following situation – maybe you can say something smart about it before we make ourselves look dumber than necessary in front of the bank or the current owner :):

We have given each other the verbal commitment that we agree on the house purchase and that the house handover is planned for July/August 2017. Since nothing has been notarized yet, ultimately either party should be powerless if the other changes their mind for reason X. So both have an interest in making it legally binding as quickly as possible.

There is the one point of the purchase contract – naturally this involves costs, we know, which we can pay out of our equity, we don’t need a loan for that.

Now we of course also need to go to the bank soon. Given our income, our equity, and our professions, it is 100% certain that we will get financing. The question is of course the exact conditions, and we know nothing about the matter.

On our part, we also want to conclude the purchase contract quickly so that it is certain: The house belongs to us from July/August. But of course, we would also be interested that the loan or the monthly credit installments only start to run when the house is actually occupied by us? Not only because we still need to pay rent beforehand and want to keep the months of double burden as low as possible. But also because the house won’t actually be ours until the handover in 10 months. Imagine if unexpected damages occur to the house until then, if it burns down or something else?

What is the most sensible way to solve this?

Maybe a few numbers, there are always smart people here:

We want to take out a loan of 260,000 Euros. We have a joint net income of about 4,500 Euros per month, my husband is self-employed and that can therefore vary somewhat. I have included child benefit here. The equity we want to bring in amounts to 120,000 Euros. We could increase that somewhat, but thought that it probably doesn’t really make sense right now to empty every account...

Hello,

you secure the financing with a corresponding interest-free availability period. In your case, it should be 9-12 months. Some banks have standard periods, usually 6 months. You have to weigh the overall financing. If a bank offers a great interest rate and a 6-month availability period, it might be more attractive to choose this one. Then you just pay the interest for a few months.

In the notary contract, be sure to fix a definite transfer date and possibly include clauses about what happens if this date is not met (interest compensation).

How do you solve this most sensibly?

Now conclude the contract and set the transfer of possession as the payment date. If the seller really wants, you can also agree on a symbolic down payment.

Hello,

you secure the financing with a corresponding interest-free provision period. In your case, that should be 9-12 months. Some banks have standard periods; the rule is 6 months. You have to weigh the total financing. If a bank offers a super interest rate and a 6-month provision interest period, it might be more attractive to choose them. Then you just pay those interest rates for a few months.

In the notary contract, you should definitely fix a firm transfer date and possibly include clauses about what happens if this is not met (interest compensation).

Ah, interesting, thanks.

So let's say we conclude financing in mid-November now - we then probably have an interest-free provision period of 6 months (at least?) and would have to pay provision interest from mid-May 2017. How high is this on average, what is considered good and what still acceptable? And the "normal loan installments" start as soon as we draw down the loan?

Conclude the contract now and set the payment date as the transfer of possession. If the seller insists, you can also agree on a symbolic down payment.

Yes, that's what we thought as well. Would that also mean that the risk passes at the same time as possession?

Setting the due date for the purchase price to a later time, i.e., at the transfer of possession, when the planned house handover is in about 10 months and the contract is concluded now, is also common, right?

Don't hold me to it, but if I remember correctly, in this case the transfer of risk is also the transfer of possession. And yes, it is quite common to set the due date of the purchase price later. It's no different with real estate. The majority only flows once the development potential has been established. I wouldn't worry too much about it, that should all be "standard" (especially in the structure "existing property is sold because of new construction").