Maturity level of planning for financing land + house

Hello everyone,

we have a plot of land in sight, for which we have already agreed on a price with the sellers. Since the sellers are acquaintances and neither of us wants to make a mistake with the purchase, we have now been given 3 weeks to think about the purchase and also to talk to an architect to clarify whether we can implement our ideas for the house on the plot. So far so good. Now the following problem arises for me: In 3 weeks I can of course only develop a conditional maturity level of the house planning, even if we have already fixed many aspects. I imagine carrying out the plot+house financing with the same bank so that I do not end up with an unfavorable interest rate situation for the house. Can I get a loan from the bank already with a rough plan and cost estimate so that I can commit to and buy the plot? How detailed and advanced does the planning have to be? Can the credit limit be changed afterwards? If so, to what extent?

We already have a bank appointment next Monday and do not want to appear completely clueless, so I would be interested in these points in advance.

Thank you for your answers!

There are two versions. The classic one: You go to the bank with a fixed concept and then know that you need x equity and y loan. The banker checks it and calculates the if, what, how expensive. Or, you go to the bank, present your plans and disclose your income, and ask how much we would qualify for. With the answer, you can then calculate and buy land or plan the house accordingly.

Thank you for your reply. The second example would now probably apply to us. I would then list the following at the bank:

[*]€230,000 land including tax+notary (we already know this)

[*]self-disclosure

The result is then an amount x€ that we would have available for the house, right?

Banks usually also accept very rough maturity stages. We only knew roughly what our house would cost and the land. We then said what we would like to finance. Then the bank added their cost table, and we arrived at a sum that made everyone happy. Then we received a loan approval (in writing), but at that time we had not yet signed any document. With that, we went to the landowner and set him up for a notary appointment. Then off to the home builder and concluded the contract there with the clause that everything depended on the successfully completed loan and the land. If something had gone wrong, we could have withdrawn.

By that time, however, we had already had several conversations with our financial broker and agreed on a bank.

Thank you for your response.

That sounds good, meaning I can initially proceed with a rough total and buy the plot of land as well as plan the house in parallel. How much can one deviate from the first-mentioned amount? Example: I say €230,000 for the plot + €350,000 for the house and need a loan of €485k for that. Now the house costs €50k more after detailed planning, meaning I need a loan of €535k. Does anything change regarding the terms? Is it possible that the bank then refuses the financing?

You should plan quite generously. If you suspect that the earthworks will be expensive (like in our case, for example), then include that in your calculations. If you are still uncertain about which heating system to install, calculate with the most expensive one. Include garden landscaping and paving work, so you can postpone them if necessary and use the money for something else. Otherwise, discipline helps. If the house is only allowed to cost amount X, then you have to restrict yourself accordingly. Whether the banks will easily approve a "follow-up financing" depends on your personal case and what the project is then worth.