Provision interest - loan amount

  • Erstellt am 2022-02-14 10:19:05

Hyponex

2022-02-15 08:48:48
  • #1
Hello

so if you write:

"That ultimately has nothing to do with the completion of the house or anything like that. It’s about drawing the loan COMPLETELY. Whether the house is finished or not is initially not relevant.

And of course, if I am paying commitment interest at another bank where only €50,000 is still outstanding, the amount is logically not as high as €280,000 at MHB."

then it probably has something to do with the "construction progress" (ok, it doesn’t necessarily have to be the completion of the house!)

because MHB is drawn completely, when? When the pre-financing is fully paid out through the house bank (which is probably linked to construction progress)

otherwise the entire amount from MHB could have long since been drawn = then no commitment interest would arise here = then there would be no double burden...

I find it very interesting what kind of constructs people build to save some money... but then if delay or whatever comes, that saving is gone, because as you can see here, you have to pay twice (interest for drawn funds at one bank, then construction period interest at the other bank because it has not yet been drawn).

so a construction takes time, yes
delays can occur, yes

why don’t people do something else? So we are talking about a bridging loan, i.e. pre-financing the sale of the property, because the equity is tied up there.

such a construction takes time. Many banks offer bridging loans very expensively (around 2.75-4.25%), which over 1 year or longer really adds up.

what I did myself (equity in the house that is to be sold after moving)
I financed it fixed for 1 year, with 1.20%, cheaper than a bridging loan (which can be repaid anytime), for that I was initially bound for 1 year (if I repaid after 9 months, I would have had to pay prepayment penalties for 3 months)
the plan was of course to sell the house after 1 year and repay the bridging loan.

of course the construction took longer, we are now finishing the outdoor facilities, so 1.5 years have passed already. After 12 months the bank simply changed the loan to a variable loan, which currently runs at 3%. For the few months it doesn’t hurt that much, but is mainly flexible...
BUT not every bank offers such a construct.
 

Benutzer200

2022-02-15 09:38:17
  • #2
That should be stated in the contracts (I work in the group ;-)). If it is not, it was forgotten. The other contracts really don't matter to the MHB. But the construction status does. Finished property = bond-eligible financing with favorable terms. Unfinished property = expensive unsecured loan. Therefore, the MHB would offer you an interest rate upon immediate disbursement that costs the MHB money. That is exactly why the option with pre-financing is chosen, so that the disbursement only takes place with (or near) completion.
 

Prager91

2022-02-15 09:40:02
  • #3


You still haven’t fully understood the issue.

Yes, we pay according to construction progress – correct.

However, if I had used the MHB loan first for my construction (€280k), the loan would have been fully paid out after about 3-4 months – since the remaining €280k (2 other financing components) would still have been outstanding.
This would have been possible!!! However, we did not do this for various other reasons, because, as already mentioned, we did not know and were not made aware that the entire loan must be redeemed, otherwise interest accrues on the COMPLETE amount.

We knew that there could possibly be 1 – maximum 2 months on which we would have to pay commitment interest. However, this would logically be very low costs due to the relatively small outstanding amount (about €50k) --> about €100-200 maximum per month, which we have to pay once. With an amount of €280k, of course, this makes about 8 times as much.

As I said, we knew about the bridge financing – no question! However, we were left pretty much in the dark regarding the COMPLETE REDEMPTION as well as the commitment interest on the entire loan.
 

Prager91

2022-02-15 09:42:18
  • #4
As said, nothing about this is stated in the contract. According to the bank advisor, we could have also easily drawn on the MHB loan first – it would have been no problem – even upon inquiry. We will still get it solved – letting it run through "advance invoices," etc. It’s only a matter of a few tens of thousands of euros now, which we will gather by the end of the month, so that the loan is fully repaid by 03/01. As said, still annoying – especially the poor communication with the bank advisor.
 

Hyponex

2022-02-15 10:29:05
  • #5
well then everything is fine...

maybe in the future ask the bank advisor beforehand if you decide on a "Konstrukt" where you can save money, but haven't made a roadmap for how it will work, and what you have to do, or how you have to implement it, so that it works that way.
 

Prager91

2022-02-15 10:33:28
  • #6


it's not like we didn’t discuss the issue down to the last detail... We dealt with the issue very, very intensively.

However, certain details in the contracts are also very difficult to discern and in my opinion not clearly communicated.

As I said, a complete repayment of the loan was never mentioned (and logically it’s none of my business how Volksbank repays the loan at MHB?) and I have already said everything about the issue of commitment interest.
 

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