New construction alongside an existing old property

Hello everyone,

my wife and I are planning a move from NDS to S-H. We live in a single-family house in a fairly good location not far from the North Sea coast. There is still around 70K outstanding debt on this property (I built it myself about 10 years ago). Now we have applied for a building plot on the Baltic Sea and are starting to think about a new build. Unfortunately, I was not successful with the search function in this forum, so here are these lines. Due to our age (50-46) we are not planning too large (about 120 sqm). Some GCs as already mentioned here in the forum have at least caught our positive attention according to their advertising/description (we are trying to build with a provider experienced in the area). Basically, we will get a certain amount for our old property, which we could pay for our new property!!! Due to our age, we do not want and will not take out too large an amount x, since we still have a certain amount to pay off.

How is the best way to proceed as long as you have not yet sold your existing property (somewhere we have to and want to live), but want to build your new one? Who has experience with this?

I am aware that without facts and data it is very difficult to give us well-founded tips or advice here, but I am happy to collect all kinds of suggestions and comments.

As a small data collection the following:
Existing property approx. 255,000 value
Desired building plot approx. 80,000
New build approx. 170,000 according to developer’s description

Regards and thanks

So first of all, the €170,000 for the new property seems very very tight! What is supposed to be included in that? Has the outstanding debt already been deducted from the value of the existing property?

Otherwise regarding the procedure, basically there are only 3 options:

1. Keep the existing property during the new construction phase and sell afterwards, which of course means you would have to (interim) finance accordingly.
2. Sell the existing property and move into a rental apartment and only then build.
3. You find someone who buys your existing property and keeps you as a tenant in the house until your new construction is completed and only then wants to move in themselves or rather buys the house as an investment/rental property.

I don’t see many other options!

First of all, thank you very much. No, the outstanding debt has not yet been deducted from the value of the inventory. In this area, real estate is not as expensive as further south. Now, regarding the 170K for the new construction, I have so far oriented myself mainly on the offers from some providers. I am very well aware that there is still quite a bit more to come, but in general, I can say that a woman and I plan rather simply and small. 120 sqm are more than enough for us in a bungalow. The targeted plot of land is also quite cheap at 80-90K, considering what others have to pay per sqm. It’s just different than 10 years ago... back then, I paid 30 euros per sqm and built a timber frame with facing bricks for 150K. Did a lot myself and saved a lot of money that way. Today, I don’t want to do that much myself anymore, and some providers ([Team-Massivhaus, Danwood]) really have a lot of services in their descriptions. I roughly add 20 or 30% as additional construction costs. We also think that we will keep our house first and go the route of bridge financing. It costs a bit more in interest, but moving into a rental apartment first, meaning practically moving twice, is also not ideal.

As a small data collection the following:
Existing property approx. 255,000 value
Desired building plot approx. 80,000
New build approx. 170,000 according to developer's description

In addition to the remaining debt, there may also be a prepayment penalty that leads to further deductions.

170,000€ for 120m² sounds like you have completely ignored all additional construction costs. Also "small things" like property transfer tax etc. are missing.

I would advise planning the costs in more detail and then talking to the bank about how to bridge finance with the old property. There may also be a lot of open land charge that can be used.

I would advise planning the costs in more detail and then talking to the bank about how to bridge finance with the old property. Maybe there is also a lot of outstanding land charge that can be used.

Thank you very much. I did not take the real estate transfer tax into account in this calculation, but I wrote it down on my note. Does the real estate transfer tax have to be paid only on the land to be purchased or also later on the completed building? What do you mean by "outstanding land charge that can be used"?

It will be difficult to find a bank that offers you only interim financing. If I were you, I would sell and move into a rental somewhere. It also has the advantage that you definitely know how much you can budget with.