Meaningful financing - building plot, new construction separate

Hello everyone,
first of all, I hope this topic fits here.

After a long search, we currently have the opportunity to buy a building plot from a private owner.

After looking at the plot, we would now like to act as quickly as possible to at least secure the building plot.
There is no concrete plan for the construction project yet.
Realistic construction start probably in about 1.5 - 2 years.

The question now is: How do we finance it in the most sensible way?
(so far hardly any experience with financing topics)

- Building plot (550 sqm) costs €93,000
- Equity of €80,000 available
- Plan for the house to be built still has to be created

Due to this combination, we have to finance part of the plot price through the bank in the short term - later then a new loan for the house construction.
Or are there sensible alternatives if the total amount for building and plot is still unknown?

If we initially finance the plot through the bank:
Our consideration is not to sink too much equity, as the credit conditions are currently so good that we would rather stay flexible with remaining equity (later freely available for ancillary construction costs).

Offer from the bank:
- Annuity loan of €85,000
- Fixed interest rate for 2 years
- Interest rate 1.09% with repayment of €300/month (more repayment probably hardly brings advantages according to the banker)

Do I understand correctly that no other bank Y would conduct the "large" construction financing with us before the 2-year fixed interest period expires, because a land charge from "Bank X" is registered on the property?

Would it therefore be more sensible to switch to a variable loan?
Because for example it could be freely refinanced after 1.5 years and possibly the construction financing for house + remaining plot price could also be taken out with another bank?

I would be grateful for feedback on whether these considerations are correct and for tips on the right approach!

Hello!

Why do you want a loan of 85,000?
If you have 80,000 in equity, then only 13,000 plus incidental purchase costs (notary and property transfer tax, broker?) are missing.

It becomes difficult if you now finance with a bank, which then takes the first rank in the land register, and if you want to finance with another bank before the end of the fixed interest period, it is difficult.
You are then, so to speak, bound to the first bank, which may possibly take advantage of this.

I would recommend:
don’t take more than you have to.
Possible would be, for example
- Construction loan often only from 50,000, with some (I believe e.g. Allianz) from 25,000
Construction loan with a variable interest rate, you can cancel it when you take the large amount.

- Regular loan (consumer/consumer credit) interest is naturally higher but with this small amount it can be neglected. To my knowledge, you do not even have to secure it with a land charge (which also costs), and you should have paid off this loan comfortably by the start of construction.

Hello Katdreas,
thank you very much for the response!

"Baukredit geht oft aber erst ab 50.000"
That is how the idea arose to go straight to €85,000.
The offered conditions are really good.
At the end of the fixed interest rate period, the rest of the €85,000 would simply be included in the large loan via refinancing.
Since the fixed interest rate period ends after 2 years, it would also be possible at that time to arrange this large loan with another bank. The first rank in the land register can then be reassigned, right?

It would be critical if a construction company is found quickly and construction starts after only 1.5 years, but the main financing (including house construction) cannot yet be realized because the fixed interest rate is still tied up for another 0.5 years.
Or would a construction company already start if a financing confirmation for the main financing is available?
This could be planned after 1.5 years, since it is clear that the land loan could be paid off 0.5 years later.

I hope my thoughts are still somewhat comprehensible.

"Normaler Kredit"
I hadn’t really considered that until now, possibly a good alternative. I will inform myself about it, which could avoid the issue of "what if construction starts earlier."

An alternative would be to cover the difference through a building savings contract and pre-finance it.

Due to the amount of €13,000, you would normally get this as an unsecured loan without land charge registration, or the building society would have no problem going into second rank.

By the way, we did it that way in 2015 as well, since our equity was not quite enough for the land purchase.

Since the fixed interest period ends after 2 years, it would also be possible at that time to arrange this large loan with another bank.

In principle, that is possible, but fees are incurred for the registration and cancellation of the land charge, which completely ruin the good interest rate for you in this short period. There are also financings without a land charge. We pay 2.05% this way as a flexible loan, which can be repaid at any time and the land register is clean.

The best solution: take the equity and borrow the rest privately from family. That way the first rank remains free. And when the house is built, just take out more and pay back the family.

It’s not about a large amount you’re missing now.