How is the amount of the land charge determined in the case of a new construction?

If we assume an assessable safety of 60 percent of the lending value, it should be mentioned that the land charge is nevertheless and certainly entered in the amount of the loan sum – at least that is how I know it from two financings.

Best regards

K1300S

Correct!

Well, I bought a plot of land for about 200,000 (excluding incidental costs) and built a house on it for 243,000 (price from the developer). I have invested roughly another 100,000 so far in incidental costs and interior construction/furnishing. Currently, it is encumbered with 304,000. Now, due to an unfortunate situation, which I do not want to go into further, another bank requires collateral of 30,000. At the moment, the money is in an account and is pledged. And with the current interest rate, that's not really great.

Let's roughly calculate (incidental costs/interior fittings have no impact on the value of the property, I just divided the amount you mentioned):
Value of land: TEUR 200
Construction costs: TEUR 243
Interior fittings: TEUR 50
= total: TEUR 493
less safety discount 10-15% = lending value TEUR 420-440

Of the lending value, 60% are evaluable securities = TEUR 250-265, however the house is encumbered with TEUR 304. I do not assume that the other bank will therefore accept a subordinate mortgage, as it is worthless from the bank's point of view. In our company, we do not accept such securities either.

The other bank will certainly accept the subordinated collateral, but the interest rate will hardly be a mortgage loan rate; at best, it will be a good personal loan rate with a risk premium corresponding to the collateral. This interest rate will probably still be better than any unsecured general-purpose loan or a car loan or or or...

The bank will check your remaining debt service capacity. If you can easily manage the payment of the additional financing alongside the financing of your construction project, it will gladly accept the junior land charge and grant the loan on affordable, but comparatively worse terms than the construction financing. If you cannot or cannot comfortably make the payment for the new financing, it will likely reject the loan application despite the land charge.

In the end, the ability to repay the loans without the sale of the real estate collateral (voluntarily or under duress) always counts.

Why should the bank exchange the cash collateral for a worthless security? If I am already giving a loan against cash, there are reasons for that. If I understand correctly, it is not about a new loan = new debt service capacity, but merely a security exchange (the bank needs a security, says the OP). As a banker, I would reject that or at least make it very expensive (5-x%), because whether I have the worthless land charge as replacement security or give the loan directly as a personal loan, it is basically the same.

Why should the bank exchange the cash collateral for a worthless security? If I already provide a loan against cash, there are reasons for that.

That's true. You can't really say much here because the reason for the cash pledge is unknown and the "other matter," for which collateral is to be provided at another bank, remains completely unclear. Everything is speculation.

Therefore, there is probably not much to say except: "Trying makes one wise."