House planning, offer, financing, fixed price

Hello, I am (we are) close to despair, truly at a loss, and hope to receive some feedback here that will give us the crucial hint to finally get out of this "we are going in circles" situation.

We own a plot of land. We have chosen a construction company and planned a floor plan with them for which we now have a binding offer (already signed). We are now supposed to take care of a financing confirmation. The first attempts to approach a financier (whom we definitely want to use) to move forward have failed in that he says he does not provide financing confirmation but at most would broker us a loan. For the confirmation, we should go to the house bank.

Now I called our general contractor (GU) to find out what criteria they have. It turned out that the GU does not just want this confirmation but basically exactly the bank we would commit to for financing. Because afterwards, a form apparently goes to the bank to make the matter binding.

We have read a lot and repeatedly informed ourselves, but it simply exceeds our limits so that, although we have been able to take good tips and have come this far, there is so much and I believe everything simply cannot be overseen.

At any rate, we informed the GU that this is a bit of a vicious circle because: We now have a house type with a floor plan that is available as a cost estimate but the selection of fixtures and finishes (Bemusterung) only takes place after the building application. That means for us we do not know what costs will arise during the "detailed planning." So, the selection of fixtures itself, maybe shifting a few walls by a few centimeters, also no drainage system (city regulation) or a cistern (which we would like) has been considered.
Another problem is that with the completion of the building application, the first purchase installment must be paid, which is around 24,000 euros and which we could no longer advance. According to the contract, we are only allowed to make the appointment for the selection of fixtures after paying the first installment.
For a loan, however, this is, as far as we know, too little information.
Most GUs amusingly always talk about a planned house at a fixed price since the bank supposedly would not agree to anything else and the builder is protected from rising costs. But right now I feel at a point, how shall I say... I actually feel tricked.

So the question arises to me how other house builders handle this...
Maybe we already made the first mistake when we signed the offer (we did look at it but well, we thought... like with everyone, so we let it be. The next papers we will no longer sign on site but take with us).

Furthermore, we have already joined the Bauherren-Schutzbund due to the situation we are in. Here, too, the consideration would be to whom one could turn who is knowledgeable about such matters but acts in our interest. Lawyer? Building consultant? How do other house builders get their fixed price which they then take as a loan? Is there such a phase in which one chooses one’s credit of "we take offer x, please send bank x a confirmation and prepare everything" (we only somehow know our final price after the selection of fixtures and that after the building application)? Are there fee-based financiers (i.e., not working on commission like ours, although ours has good reviews) and how does one get access to them because we have already Googled a lot but found nothing?

Okay, long text, tried to keep it short, questions will probably still come (welcome, I will answer everything you might be missing). I assume the size of the plot and house is of secondary importance to our problem.

I would be grateful for any tip that seems sensible to me and that we could also tackle because we are going in circles and I still have a few open issues. Primarily, I would very much like to solve these to finally move forward.

Thank you for now to everyone who reads this and an extra thanks to those who leave us a little answer.

Best regards Almifosa

Your approach is strange too. Make a cost breakdown and estimate the final sum (which is definitely possible) and include a five-figure buffer. Then sort out the financing and only then sign the offer for the plot and house. First the signatures, then the financing, phew... brave.

So in your current situation:
1) Stay calm
2) Stay calm
3) Cost breakdown
4) Go to the bank and secure financing

Just coordinate with your bank about how to handle the situation regarding [Bemusterung]. Ours, for example, makes a €25,000 increase in the financing amount afterwards without raising the mortgage and without any problems. If I don’t end up needing it and there is even some left over, I can pay it back immediately.

New
Your approach is also strange. Make a cost breakdown and estimate the final sum (this can certainly be done) and include a five-figure buffer. Then secure financing and only then sign the offer for the plot and house. First the signatures, then the financing, phew... bold.

Well, the offer for the house is not yet a purchase (at least that’s what we think; if it were to fall through, a maximum of 3000 euros for the planning would come to us, which we accepted as a risk).
Yes, our consideration is also to estimate but then immediately tackle the loan because we don’t want to start twice and are also somewhat really uninformed. By now, there is also the idea to have something like this checked by a lawyer so that no further errors occur.
The plot of land is already ours, which we were able to finance through equity. So that item is eliminated. And we had already informed ourselves about our financial budget; we just had a different approach in mind which now presents itself differently in the sequence of handling.

So, in your current situation:
1) Stay calm
2) Stay calm
3) Cost breakdown
4) Go to the bank and secure financing

As I said, maybe we also have a thinking error out of ignorance...
We would like to choose the cheapest financing offer like anyone else but with our financier it’s not about confirmation but only about the loan granting.

Coordinate with your bank on how to handle the situation regarding the specifications. Ours, for example, allows an increase of the financing amount by €25,000 afterwards without increasing the mortgage and without any problems. If I don’t need it, and something remains in the end, I can pay it back directly.

Yes, we have that in mind too, but we keep facing the question whether to calculate and take out the loan right away or wait for this confirmation first? Is there anything in between that we don’t know? We already called our house bank about such a confirmation but are still waiting for an appointment there. But since we cannot imagine that our house bank will make a better offer than the financier, we currently assume that this would only be a means to an end, which, due to the form from the general contractor for the liability declaration, ultimately would be neither fish nor fowl.

so

the financing commitment is basically your protection so that you don’t already cause immense costs even though you don’t even know if you will get money at all.

I am much more surprised that you haven’t stumbled over the car devil trap yet, because it is really ridiculous. the bank needs a KFW confirmation for the house. the company only creates this calculation once you have the financing
in your case you should go to the banks and talk to them. you already have a "fixed price" for a house according to the construction service description. and now you add the additional costs for extras on top. which ones these are is stated here in the forum in every 3rd thread, also with approximate amounts. the plot goes perfectly as equity (if it is paid off).
if a bank assures you that the financing works, they will fill out a sheet for you. with this sheet the construction company then starts and causes hefty costs for you (e.g. €22,000 for the first installment after the building permit application - and that really goes quickly...). usually the financing is not yet with the notary etc., which is why you should clarify this with the construction companies right away. we only got our money at the 3rd invoice after completion of the foundation and start of masonry and then paid all invoices at once. no problem, you just have to agree on it beforehand.

you can list your prices here that you know so far and maybe someone has mercy and tells you which prices you can still add approximately.
refinancing is quite expensive, better to get the right amount right away. with special repayments (if available) you can quickly pay back 20-30,000 too much at the end...

The financing commitment is basically your protection so that you don’t already incur immense costs, even though you don’t even know if you will get any money at all.

Yupp and also perfectly fine from the basic thematic perspective.

I am much more surprised that you haven’t stumbled over the kfz trap yet, because it’s really ridiculous. The bank needs a kfw confirmation for the house. But the company only creates this calculation once you have the financing.

Hm no idea, what we have is the cubature. And KfW is not with us. (Everyone sees that differently and individually, but we assume that the "standard" is completely sufficient)

In your case, you should go to the banks and talk to them. You already have a "fixed price" for a house according to the construction service description. And now you add the additional costs for extras on top of that.

Yes, we are currently trying to roughly (ballpark) determine that.

If a bank assures you that the financing will work, they will fill out a paper for you. The construction company then starts with that paper...

Okay, that definitely helps to get a better idea, thank you very much.

That’s not entirely correct. You look for a bank through the financing broker that will finance your construction project. Once that is done, there is a preliminary financing commitment (by the financing bank) - usually verbally. Only once the loan contract is signed is there the so-called financing confirmation. Here you should further distinguish between a simple confirmation and a financing guarantee. What does your general contractor require?

Okay, so it really is (as we already suspected in the meantime) about the credit that now has to be arranged. This confirmation is, well, from our perspective more like a kind of interim notification which we could do without if we set everything up firmly right from the start. Our general contractor says he wants a financing confirmation. When I called the company to follow up on what exactly they mean by that, the result was: once we have found a bank, we inform them and the general contractor sends out a form they want filled out so that it becomes a binding confirmation. Some banks would know this form (we don’t, since we feel pretty "uninformed" in this regard) so whether that is the one or the other... no idea.

The costs of a soakaway as well as a cistern can be named to you bindingly by your general contractor in advance. Whether moving walls causes additional costs as well, too.

So, BB and KVA should definitely be reasonably detailed (but just from a layman’s perspective). From our point of view, I would still say significantly more detailed than some others. (We really took effort to compare exactly what was included or not included with whom.) The soakaway and cistern, yes, I think I will approach my general contractor again through another "construction site" anyway. Moving walls definitely doesn’t cause a price change, rather the surroundings if you’d prefer your stairs 10cm wider (for example).

No small construction project with the usual 6%

That’s making me nervous now because we exactly put Otto below that point in the KV (yes, we’ve learned from that, no more signatures on site). According to the offer, we have a payment plan attached which provides for 8%. Furthermore, it is a 125 m2 house with 65 m2 WU basement (worst case since a soil survey still has to be done and only then can one estimate if it’s doable without. We planned with it just in case).

Sampling… well, in case of emergency we are programmed to standard; it doesn’t have to be all at once. The real goal is mainly the house with basement and suitable floor plan. At some point one will certainly "modernize" again, I always see that with older people.

Yes, single-family house at a fixed price. It also says that the general contractor has no influence on what we choose, which in turn could increase the price. And no, we didn’t look at references because we didn’t see that as a problem. Our gut feeling is definitely in the green zone; it’s just hugely scary that every step could unleash a catastrophe due to our ignorance. And I have read a lot but simply did not understand what this financing confirmation is all about. For us, it probably would have been easier if someone had explained: hey, you need financing now, so basically the approved loan, because with those papers you have everything you need from the GC’s side.

You are a member of the Bauherren-Schutzbund – so they will also provide you with the appropriate staff.

Yes, unfortunately I have not yet been able to reach the building consultant, but I am of course trying to; he should then also carry out the construction control. But what wasn’t clear to me was whether I might be at the wrong place with the problem we currently have? Well, I just assume he is only there for our construction control and not for organizational-type questions … "How do I get to my house?"

Thank you very much for your previous answers, they now take a part of the huge tangled ball from my stomach. I just didn’t know where to continue anymore (I still don’t, but now I have a better idea of what to do).

Starting point: land available and 100% paid from equity.

So, this is how we did it: had several conversations with different banks in the region – what is possible and who offers what. Our financing partner then became our house bank. With this amount, we decided on a house type, then chose the company for it. It was also one from the region. We included all wishes and extras in the planning and also received several drafts. With the final draft, we continued to look for the incidental building costs. Civil engineering, kitchen, etc. We also had a geotechnical soil survey done. Financing also includes a 10k buffer and 20k for the garden. With this, we had everything completed at the bank, i.e., all contracts. The signature was placed under the order at the house construction company. Afterwards, the written financing confirmation came from the bank. The land was financed from equity, as was the first installment to the company after submitting the building application. All costs incurred so far (land incidental costs, insurance, notary, land registry office, ...) were also paid without a loan.