Land purchase with varied financing - is it sensible to hold back equity?

What is sitting in your account does not interest the bank for the loan conditions

That may seem to be the case at first, but if you have enough saved up, you will be courted and sometimes not asked so insistently for collateral anymore.

It can of course make sense to hold equity if you plan a lot of own work to settle invoices and not always have to bother withdrawing funds.

That was nicely put in a roundabout way :-)

Then you have to contribute the equity - holding back a little worsens the conditions.

We agreed with the advisor that as much equity as possible should be put into the whole project. Maybe he also meant that we should only hold back a little cash equity to cover the notary/land register fees from equity, for paying off the variable financing with the long-term loan. But, going by instinct, I would say that’s only a few hundred euros. I will question this again in another consultation or when it really gets serious. Many thanks to you all for the answers confirming that as much equity as possible can gladly go into the land purchase, even with variable interim financing.

Hi, I would keep some equity as a reserve and buffer (bad if everything is gone, the financing is running and then something expensive breaks). I don't know if that's really the cheapest way, but I would feel better. If it hasn't been needed after 1-2 years – and a new reserve has been saved up – you can always put it into special repayments. Regards Olli

When you first buy a plot of land, most and definitely the most expensive incidental purchase costs are already incurred. Later, actually only the final registration of the land charge at the notary has to be done. That doesn't cost the world (at least when you consider the entire project). I would also keep a buffer, or rather preferably include it in the financing. Then set aside what is needed for furniture, kitchen, lamps, and so on, and the rest can go into the plot of land.