How to correctly determine the loan amount when there is a lot of personal contribution?

Hello,

basically the main problem is always how you define EL!

Material and equipment rental should be financed by the bank and the labor is then EL?

That means friends and acquaintances work for nothing nada?

Otherwise if there is an architect he can best estimate the trades and disclose it to the bank.

And this is where the bank's fundamental problem begins. They want to finance a completed house in a technically good condition and not the cheapest. If you come with an unhealthy EL proportion, it will certainly lead to rejection.

How are your finances otherwise?

... have you ever been to a bank or your bank to discuss this?

Although we already visited our home bank 1-2 months ago, at that time it was still with the plan to build turn-key and that would be (financially) no problem.

I only know that banks accept a flat percentage as EL.

That’s how I have known it from reading along so far. Therefore my question to you is how you handled it? If you go by the comment from , then all the trades done by friends and acquaintances would not be EL:

Your friends will hardly do it for free, so it is normal to include it in the calculation and not consider it EL.

I also think that they will not do it completely for free. However, it is important to ensure that it does not turn into the Freitag and Schwarz company. Others who are in a direct family relationship (parents, siblings) probably not so much.
But what I am really interested in is how to get from the contract price to the EL price. So if the shell construction, for example, costs 70,000€ at contract, how expensive would it then be for me?

Real own labor can simply be shown in an Excel table – if realistic it is usually accepted. Recently, someone wanted to declare 120,000€ EL at the bank here and wondered why it was not accepted… but you certainly shouldn’t be surprised about that.

Those are good hints, thank you very much. That way we could present our EL (in the classical sense) to the bank (painting, flooring, roof slope insulation, etc.). That realistically would not exceed 20,000€. The remaining trades would therefore not be own labor (since not performed by us), but of course correspondingly cheaper than if contracted.

Additionally, I would have my friends give me a cost breakdown. That means required material, helper hours, needed tools (whether purchase or rental).

Would the overall procedure look like this?
- The architect creates the designs and a detailed scope of work description
- We mark the trades that we want to "do ourselves"
- For these positions, we (in consultation with our acquaintances) enter the costs for materials, tool rental, token payment ourselves
- For the remaining trades to be contracted out, the architect estimates the costs
- With the implementation plan and the total sum, we go to the bank

Basically yes. Just don't make the mistake of overestimating the helpfulness of family and friends. A retired father is certainly happy to help out every free minute. A buddy with a family might join for a weekend, maybe a second one, but then that's enough. For a complete trade like masonry done by a good friend, I would apply the regular costs and deduct a friendship discount, which, however, will certainly not be higher than 10-15%.

don’t forget the rental cost of the construction crane

A very valid point, thank you very much! Notes of this kind should then also come from our acquaintances (for their respective trade) or from the architect if something more significant has been forgotten, or is the architect not so involved in detail?

Material and equipment rental is to be financed by the bank and the labor cost is then EL?

Do you have to break that down so detailed to the bank for which costs the loan is used / not used? But other than that, that would probably be the case, yes.

And that is where the bank’s fundamental problem begins. They want to finance a completed house in a technically good condition and not the cheapest. If you come with an unhealthy EL share, it will certainly lead to rejection.

That’s why I liked the suggestion above to limit the definition of EL to the trades we can do ourselves (painting, etc.) The other scopes should be done by our acquaintances as professionals who do this for a living anyway.

How are your finances otherwise?

Basically, the above are already the essential details:
- Income: €6,000
- Regular expenses: approx. €2,000 (excluding rent)
- Current equity: €100,000 bank balance (expected to be €130,000 until construction start)
- No securities or similar
- No debts, no alimony or the like
- Land: €50,000 will be paid from equity
- Current rent €900 including utilities

A very valid point, thank you! Such notes would then also have to come from our acquaintances (for their respective trades) or from the architect if something more serious was forgotten, or is the architect not involved in such detail? Do you have to break down to the bank in such detail what costs the loan will / will not be used for? That’s why I found the suggestion above good, to reduce the definition of EL to the trades we can do ourselves (painting, etc.). The other scopes should be left to professionals who do it professionally. Basically, the above are already the essential pieces of information: - Income: €6,000 - Current equity €100,000 bank balance (Expected until construction start: €130,000) - No securities or similar - No debts, no alimony or similar - Plot of land: €50,000 is paid from equity - Rent currently €900 warm

Hello, payments are made according to construction progress and invoice submission (standard case). You can also have 10-20k paid out as a lump sum, but then you must prove the use afterwards. I still do not know what idea is behind this. Do you want to save costs? And how realistic is it to do these trades in EL? After all, you have a solid income & equity to possibly refinance.

payment is made according to construction progress and invoice submission (standard case). You can also have 10-20k paid out as a lump sum, but then you have to prove the use afterwards.

Oh, that wasn’t really clear to me. In that case, material and equipment rental (each with invoice) would probably be the required proof.

I still don’t know what idea is behind this. Do you want to save costs? And how realistic is it to do these trades in EL?

Oh, the motivation is completely missing in the initial post. Sorry about that. We have the following concern: We misestimate the costs in advance and then either a) have too little loan and have to refinance expensively or b) have too much loan and pay interest and commitment fees on money we don’t actually need.
The overarching goal of doing work ourselves is, of course, to save costs (who would have thought). The bank advisor gave us a total price of 450 - 500k€ (1.5 floors, basement, double garage, KFW55) for a house in the village, where in my opinion a significant loss in value must be expected upon sale (sale is not actively planned as of today). And even with equity, that would mean a loan term easily >30-40 years.
The other (and almost more important) point: I want to keep a certain flexibility in the execution during construction and have the trades carried out by people I know have been skilled craftsmen (for years) and won’t botch the job. I hope this doesn’t drift into fundamental discussions at this point.