How/when to complete financing?

Hello everyone!

I currently want to purchase a new apartment within a larger complex directly from the developer. The marketing runs from summer 2020 to winter 2020. Construction takes place from early 2021 to mid-2022.

I already bring a large part of the real estate costs through equity. For the last third, I would need to take out a loan. Since the payment is made according to the construction progress, I would probably only need the loan around the end of 2021 and would pay the installments from my own funds beforehand. Now the seller wants a financing commitment from a bank at the signing of the contract. How should I approach this most cleverly? If I become more concrete with my financing request at a bank now = summer 2020, I would have to pay commitment interest until the end of 2021. I want to avoid that. Probably I cannot finalize financing only at the end of 2021 either, because the seller naturally wants a commitment now. Is it common that the seller would accept proof of equity covering 2/3 of the costs here, or how can I best avoid commitment interest?

At that time, we quickly had a financing commitment obtained from a bank by the financing advisor, but in the end, we signed the contract with another bank. However, you must also be able to prove the other 2/3 to the seller.

Is it customary that the seller here would also provide proof of equity for 2/3 of the costs?

No

How do I best avoid commitment interest like with rmeide?

Probably not at all. It’s not really a big deal. Possibly the financing confirmation is sufficient and you only finalize the financing in 2021. At whatever good or bad interest rate.

P.S. You always pay commitment interest from the time of approval. Either shown separately or included in the interest.

Maybe you can also arrange with the bank that you use the equity capital later and pay the first invoices with the loan. It worked for me.

Maybe you can also arrange with the bank to use the equity later and pay the first invoices with the loan. That worked for me.

It’s the same with us. Many banks also accept commitment interest for 18 months (or up to 24 months possible).

If I first use the [FK] and later my equity, then I pay less commitment interest but more debt interest. But if I understand you correctly, then I probably need a financing commitment from a bank for the purchase. This is not the same as a contract for financing?!