Process of financing / purchase of the land

Hello,

we might now have the chance to buy a plot of land. In/around Berlin a very interesting topic... We have not yet decided on a "home builder." We would be able to finance the plot from our equity.

According to various financing advisors, banks prefer to finance land and house together rather than just the house. This confuses us, as it should actually be irrelevant whether I use the equity for the land or the house. Since we are not yet that far with our home building companies, we cannot currently specify a total amount for financing.

Thanks!

Regards

That's great! We did it the same way. Pay for the plot of land with equity and later, when the developer is confirmed, use the plot as equity in the financing. Totally easy :)

Various financing advisors said that banks would rather finance the land and the house together instead of just the house.

I consider that completely unfounded. Construction loans naturally require a certain volume (no bank likes to lend you less than 100,000 euros at an interest rate acceptable to you), but you can easily reach that volume just with the house. Buying the land first, paying for it in cash, and then calmly planning the house is the absolute dream scenario, IMHO.

Various financial advisors said that banks would prefer to finance the land and house together rather than just the house.

That is correct if two loans are taken out. One for the land, one for the house. Then the bank with the house financing would be in second place in the land register. However, this is not the case when buying with equity. In this respect, really an ideal scenario.

The only thing you need to watch out for is whether the land must be built on within a certain period.