Loans and Construction Credit - Creating KfW Usage Evidence

Hello everyone,

this year we bought a house from a property developer. For the planning of special requests, we were referred directly to the construction company, with whom we now have to conclude a separate contract for the special requests. The costs for this are due immediately after signing.

The house construction itself will begin in about 1 month, payment is as usual in installments according to completion. The first installment is due for ground works. Completion is expected around February 2016.

We have financed through our house bank and additionally have a KfW loan of €50,000 (energy-efficient building).

Now my questions:

1. Are we allowed to use the costs of the special requests (approx. €10,000) from the KfW loan? It will still take almost a year until completion, only then will the developer create the proof of use for us. On the other hand, I think I read that the proof of use is only due 9 months later, starting from the date the loan was fully utilized. Is that correct?

2. I have heard that we are not allowed to use the KfW loan for the ground works, is that true?

Thanks in advance for your answers!

Matthias

Hello Matthias,

The costs for this are due immediately upon signing.

On what grounds? Usually, additional costs are distributed proportionally across the contractually agreed installment payments or appropriately according to the trade.

Easter greetings

With what justification? Usually, additional costs are proportionally distributed across the contractually agreed installment payments or appropriately allocated to the trade

With the "justification" that otherwise no special requests will be executed at all. We also discussed it at length, no chance.

However, the developer is quite well-known in the region and we had heard that before. This is anything but usual, we have a higher risk, etc. We are aware of that – and since we have no other choice, we will have to pay for our special requests soon.

And precisely because it is so early, the question of using the KfW loan naturally arises.

Not only do you have an increased risk, the bank does too and does not like it at all. What kind of special requests are these? Does it concern the energy standard? Then the argument would be easy for me.

But if it is other special requests, then use your own equity or alternatively the money from the regular construction loan. Or what speaks against that?

Not only do you have an increased risk, the bank does too and does not like that at all. What kind of special requests are these? Does it concern the energy efficiency standard? Then the argument would be easy for me.

Well, it goes all over the house, from basement insulation to underfloor heating to different bathroom fittings.

But if these are other special requests, then use your equity or alternatively the money from the regular construction loan. Or what speaks against that?

These special requests were taken into account when calculating the total loan amount, so we should already use either the KfW loan or the construction loan. The interest rate of the construction loan is almost 1% higher than that of the KfW loan, so it would be more economical to use the KfW loan first.

Well, the bank is reluctant to disburse funds without receiving something in return. What about your equity?