Property financing - variable or with a fixed term

Hello everyone,

I am new to the forum and would appreciate your experience and advice.

The following situation:
We have found a plot of land (from a private owner) in a new development area that is currently being developed.

Building is allowed as soon as the development is completed. This is currently roughly expected by early 2022.

Now we are considering how to finance the plot.

1. Option: variable with higher conditions and later refinancing at Bank X with the total financing.
2. Option: financing with a term of 1 year with slightly lower conditions and also refinancing here with Bank X with the total financing.

With the 2nd option, I am a bit unsure whether a seamless transition will work well if we want to have the total financing with Bank X at the beginning of 2022 (or possibly already the end of 2021) but the plot financing still runs for a few months.

I would appreciate your feedback.

Thank you very much!

I would appreciate your feedback.

Basically, it doesn't matter. With the short term, the interest differences in € are also negligible.

With the 2nd option, I am a bit unsure whether a seamless transition would work well if we wanted the overall financing at Bank X from the beginning of 2022 (or possibly already at the end of 2021) but the land financing still runs for a few months.

That is also not a problem, since Bank 2 could replace Bank X at a fixed (timely) date.

I would rather tend towards variable so that you are more flexible with the transfer fee. With b, you have to worry about financing in addition to construction.

if you are so close (less than 1 year) before the start of construction, the financing can also be done completely. Interest-free period of 2 years. Or have you not started planning yet and the financing is critical

We made it variable and then refinanced it with the [Hauskredit] – so you can always prepay and pay in as much as you want anytime :)

It was a good decision!

Regards

We made it variable and then paid it off with the home loan - so you can also make as many extra payments and deposits as you want at any time :)

It was a good decision!

Regards

Thanks for the feedback.
How long did you have interim financing?

That's how we imagined it too.
Unfortunately, we are a bit in limbo because we don't know from when construction will be allowed due to the development work.
According to the project manager of the development, 2022 might also be tight for various reasons. The owners would receive exact information in the near future.