House: Extension, conversion, modernization, and acquisition - procedure?

Hello everyone,

I have already searched intensively but have not found a case that fully fits my situation. Therefore, I am opening a new thread here in the hope that someone can help me.

The following situation:
My wife and I are currently living with our child in my parents' house. The house is a two-family house with 2 identical residential units, one on the ground floor and the other on the upper floor. Fully basemented and with a partially converted attic. Current value approx. €300,000-350,000, depending on who you ask. But the order of magnitude should be correct.
My parents have not yet fully paid off the house, so there is still financing running. The current loan balance is about €100,000, but at a very low interest rate which is no longer available today. Interest rate fixed until 2030.

The plan now is to build an extension, renovate certain parts of the existing structure (move walls, relocate the staircase, etc.) and of course also modernize. In this context, the house and land are to be transferred to my ownership by way of a gift in order to later minimize administrative effort (I have no siblings). The costs for the extension/renovation and modernization will be borne by my wife and me. The ground floor, upper floor and attic would then form one residential unit for me and my family. My parents would then move into the newly created basement apartment. Both residential units would have completely separate entrances and would not be connected to each other.

We have already spoken to the bank and received the recommendation to keep the existing loan and continue having my parents pay it off. A gift would still be no problem and the structural changes are possible under this constellation.

What we have done so far:
- Planning created by the architect
- Preliminary review by the structural engineer carried out
- Current site plan created
- Conversation with the bank; documents submitted for financing review

What we still have to do / do not yet have:
- Financing commitment from the bank
- Submit building application
- Execute the gift transfer

According to our contact person at the bank, currently only building applications with secured financing are accepted. However, he more or less also needs a commitment from the city that the building project will be approved. A little chicken-and-egg problem, at least in my interpretation. The planned gift probably brings some additional complexity here.

Now to my questions...

[*]In what order should we proceed?
[*]Is there anything that needs to be considered, for example with a gift under the given framework conditions and plans?
[*]Who are the right contacts for such matters?
[*]Has anyone had a similar case and can share some experiences?

I would like to thank you in advance for the support.

Best regards

We have already spoken to the bank and received the recommendation to keep the existing loan and continue having my parents repay it. A gift is still not a problem, and the structural changes are also possible in this constellation.

It is also possible to take over the loan if the bank agrees. From the parents’ perspective, I would not give up the house and keep the debts.

According to our contact person at the bank, currently only building applications with secured financing are accepted. However, he more or less needs a commitment from the city that the building project will be approved. A bit of a chicken-and-egg problem, at least according to my interpretation. The planned gift probably adds an additional complexity here.

Was your contact person at the bank a trainee? What nonsense – if building rights exist, you can submit a building application and it will be approved. There is no discussion about that. Period. Done. And the bank does not need a building permit for a loan either. They need a plan and a cost calculation or your loan request. For disbursement of the loan, of course, a building permit is mandatory.
==> Talk to someone at the bank who knows what they’re doing. It is quite normal that there is no building permit before the loan. Just as there is no purchase contract for a finished property before financing. Worst case is that the house cannot be rebuilt at all and you have to pay a so-called “non-acceptance compensation” to the bank if you do not use the loan.

Now to my questions...

[*]In what order should we proceed?
[*]Is there anything that should be considered, e.g. in a gift under the given framework conditions and planning?
[*]Who are the right contacts for such matters?
[*]Has anyone had a similar case and can share some experiences?

1. Submit building application
2. Secure financing and if possible take over parents’ financing (called debtor change)
3. Go to the notary and discuss the gift – gift before new construction, to keep the value of the gift low and avoid any discussions
4. Discuss further steps with architect or construction manager etc. (tenders, looking for a general contractor)
5. Build when the building permit is granted