Question: Procedure for New Construction - Financing and Land Acquisition

Hello everyone,

we are about to sign the purchase contract for a plot of land. At the same time, we are in talks with developers and mortgage advisors to find the best deal for our house construction.

Now my question: what do you actually do first? We have about 20% equity that we would like to contribute. However, the plot costs more, including notary fees, agent commission, and property transfer tax, so about €35,000 above our equity. How does it work when we sign the land contract? Is it common to pay the entire amount immediately from the equity, or can we wait until we have a construction loan and they then provide us the money for the land? We would prefer not to spend all our equity if it then harms our financing because we have no equity left.

Everything is very new to us and so far I haven't been able to find information anywhere. It would be nice if you could help me.

Thanks!

DanielaS

Good morning,

the equity is not gone, but you own the majority of a building plot which also constitutes equity.
There are several options, first, you could finance the 35k with a one-year loan that is then refinanced. The advantage is that you could switch banks on the way to the house.
Another alternative is to talk to a bank right away and see if they can offer you a good overall package.

The other question is also how quickly the plot must be signed and paid for? Maybe there is a little time here to progress with the planning.

And finally, you have talked to construction companies, developers are the ones who sell you a finished house on a plot ;)