Pledge existing property to increase equity?

Hello everyone,

to examine different options for our financing:
Would it make sense to mortgage an existing plot of land to finance another one?
For various reasons, it does not make sense to build on the existing plot.
Unfortunately, it also cannot (yet) be sold at the moment. The plot is unencumbered.
It would currently be worth about 25%-30% more than the plot to be acquired.

Moe

Depends on what other equity you have. If none or very little, the property probably reduces the interest. It does not matter whether the financing bank registers itself additionally here, or if there is a separate loan with which you buy the property.

For the pure house construction, we would have about 30% equity. However, if the land also needs to be financed, the equity share would shrink significantly to at least 20% or even slightly below. This would probably exclude some banks and adversely affect conditions. Therefore, the idea is to take out a mortgage on the existing land. If I borrow at least 50% of its value, I can easily achieve 50% equity in the financing of the house including the land. Someone told me that overall better conditions might be available this way.

How much that brings in the end depends on the specific loan-to-value ratios and the bank. In this respect, you just need to get offers. It can be done, but it takes away your flexibility to sell the second property spontaneously.

How much that brings in the end depends on the specific loan-to-value ratios and the bank. In that respect, you just have to get offers. It can be done, but it also takes away the flexibility to sell the second property spontaneously.

Yes, we are aware of that.
I thought there might possibly be concrete experiences where this was done or a similar constellation applied.

has still mortgaged his condominium.