House purchase / How to obtain financing approval? Regulation / Equity?

First of all, hello everyone, I am completely new here.

We want to buy an existing property, but we don't have a specific one in mind yet, although we have already looked at quite a few. Unfortunately, nothing suitable has come up so far, or the perceived price was significantly overpriced.

Assuming we have now found a house that appeals to us. The seller (and the agent) will be interested in whether we can actually pay for this "fun." So it will mean getting a financing commitment from a bank. The seller wants to know that he is talking to someone who can afford the stuff!

How does this usually work? I have the equity deposited as a savings account with various banks. Does the financing bank want to have the money "with them first" before they commit?

First of all, everything that HausbauBlog wrote is correct and I just want to add a few tips: We bought an existing property last year and searched for about a year in total... so don't give up. I don't know if you have already had a conversation with the bank, but we first had a preliminary talk with our house bank (with whom we are now financing) to determine what we can afford. If you have a good contact with your advisor, you can also quickly get a confirmation because really good properties at least in our area are off the market within a week. We experienced this with a house we would have taken: the price was great, the property was posted online on Sunday, we viewed it the following Saturday, would have agreed immediately, but on that day someone else already snapped it up. The house we have now would also have been gone that fast (one here in the settlement also went within 2 weeks recently). Regarding the bank, we initially got offered a worse interest rate, but since we had several talks and I was on the same wavelength with the advisor, I took a printout with a 0.3% better interest rate from the Interhyp website and thanks to the figures on the Interhyp website we then got the same rate... so there is usually good room for negotiation...

One more thing: A notary escrow account is actually not common. It is only used for "difficult" purchases. In our case, it was a simultaneous exchange transaction and everything worked perfectly. The last step is that the notary receives a notification that the entries in the land register have been made, and then informs how the payment should be made. We then only had to give our bank the okay to carry out the payment as the notary had sent it in writing to everyone.

Thank you very much for your answers!

Yes, I would preferably go through a [Notaranderkonto], then the payment goes through the [Notar]. Even if it costs extra. I only buy a property once in my life and nothing should go wrong. But that's just an aside.

Alright, I will provide proof of equity via [Kontoauszug]. That’s fine.

Hello

So our bank was not interested in our equity at all. But probably it differs from bank to bank - and maybe it also matters whether you are buying or building. Our bank only looked at the total value and calculated what % of the value they have to finance. How we finance the rest did not interest them. During the construction phase, we have to regularly submit proof of how far the house is completed. Only then is the next amount paid out. This way the bank ensures that the value of the house always corresponds to the amount paid out.

Regards Micha

Yes, the approach is correct. First, go to the bank and have the "possible debt service" calculated, meaning how high a payment can be from the bank's perspective. Then compare that with your own expectations, so feel free to keep a household book. Or simply review your checking account statements to see what you actually spend. Another interesting calculation method: current cold rent plus what you are already saving for the property. That already results in a manageable construction loan.

Now the bank advisor can calculate which financing amount is currently hidden behind this possible debt service. You can then search based on this value.

Once the property is found, go back to the bank. Necessary property documents: current land register excerpt, site plan/cadastral map, calculations of living space and volume, building drawings, fire insurance certificate. The broker should provide all of this unsolicited in a folder for the large fee they receive.

The bank now creates an offer in addition to the personal documents (this can also be proof of equity) and commissions the preparation of the loan agreement. ONLY THE LOAN AGREEMENT SIGNED UNILATERALLY BY THE BANK IS THE BINDING COMMITMENT OF THE BANK. Most "pre-confirmations" include some form of "subject to" in the text. A personal commitment from the bank advisor, even by email, should be treated with caution. For legal reasons, banks must issue a commitment through two separate departments. The person alone does not have the authority to draft the commitment.

The loan agreements are with you after 2-3-4 weeks. This is a completely normal processing time. I recommend going to the notary only after receiving the loan agreement. Now the notary contract can be signed without risk. After signing at the notary, return the signed loan agreement to the bank. Should the seller fail to appear, you have not entered into a loan agreement, subject: non-acceptance compensation.

Never let yourself be pressured by a broker. If they say other clients want to buy immediately, other banks would do everything much faster, etc., etc.... better to look for a new property with a reputable broker.