Land value too low - therefore no approval for construction financing

I understand the standard land value. But I do not yet understand the difference between the loan value and the market value. Market value I could only extract, the current or last year's value of a property, so the entire package of the house and the land, but loan value?

No, market value deduction means that there can be adjustments for houses depending on the calculated value. An example is the luxury villa in the deepest (structurally weak) east at the a... of the world. Anyone who builds a villa there for a million has to expect that the house will lose value immediately upon completion. How much exactly, the market value deduction can tell you – provided the appraisal committee states it. I myself had the extreme case a few years ago where the valuation assessed a house at one million mathematically. Then came the market value adjustment of about 40% (as far as I remember correctly), because houses simply are not traded at that price in the area (it was a very rural area). In that case, a lovers' object.

ah..ok. So if I want to build there (do additional construction costs also count?), the price goes down, if the standard land value doesn’t rise, but remains the same or falls, after one year the house is only worth half the price? I can’t say whether “Winkelbungalow” is necessarily a lovers’ object.

Market value simply means the current price achievable (on the market). Since real estate is currently in demand, especially in reasonable locations, market values are often high. Loan value is a long-term oriented value that disregards a "rush" on real estate. It is calculated very cautiously (originating from the Pfandbrief), so there are sometimes significant differences between market value and loan value. Example: Düsseldorf Königsalle, one of the best property locations/shopping streets in Germany. Here stands a rented property with an annual rent of €1 million. You can probably buy the property now for €32-35 million (market value). In the loan value (calculated long-term and sustainably, also considering legal requirements) you will only end up at €16-17 million. Of course, this is an extreme example...

Ok. Can you, since I see you are a banker, give a realistic example for an average earner? So we don’t have millions in an account. No one knows where Liebenwalde is. I also cannot predict whether the market will rise in the next few years. The roads have been built, expanded, and improved. Electricity, gas, and sewage are available. The lock and new bridge for boat landings etc. have been newly made. Soon the city should also be called Liebenwalde on the Finow Canal or something similar. The only thing one could associate with this name is the boat lift in Niederfinow.

Roughly speaking, the lending value for a single-family house/condominium is about 10% below the market value – market value adjustment not taken into account (by the way, there can also be surcharges).

Your own house:
Costs (excluding acquisition incidentals, as they do not increase value) are: €219,000
Let’s assume this is the market value. Then the lending value is probably somewhere between €195,000 and €200,000. For a collateral value for the bank equal to the lending value (the bank assumes that it will only receive 60% in the event of a forced sale), you want a loan of €240,000.

Brief and to the point question: Why should the bank do that? Why would you lend yourself a loan that is about 20% higher than the value of the collateral?

Ok. Before we decided to build, we looked at an existing property and inquired about how much net loan we would get. The price was calculated based on our income and it amounted to 205K. The loan request is, of course, somewhat higher. And because of our savings, which by the way are also 20% of the loan, we would pre-finance until the savings run out. But apparently, it turned out differently.