Real estate consumer loans

Hello everyone,

we are currently in the process of signing our loan agreement for our construction project.

I have a specific question about this:

Of course, we must first use our specified equity before the invoices are paid with the loan. In the cost estimate for the loan, we have also left a buffer, which should normally be sufficient.

We already have confirmation from the KfW bank, which will pay us the grant of €42,500 after completion. We want to pay for the garage and exterior work from this grant. Of course, by the time of completion, we will have saved some more money again.

That’s the situation, now to my question:

What would happen if the house unexpectedly becomes more expensive? Can we simply cover the additional costs with our savings, or can the bank then say we have to refinance, even if we have the money?

Since I do not find any clause about this in the contract, I assume that we can use our savings. But I wanted to ask naïvely once more.

I will also inquire directly with the bank about this, but maybe my concerns can already be alleviated today.

What would happen if the house unexpectedly becomes more expensive.

1. Use equity
2. Ask the bank for additional financing (which they might refuse)
3. Go bankrupt if neither equity nor the bank are available for completion

We have also factored in buffers, and in the worst case still had various items included that we could have postponed in the absolute worst emergency. For example, paving work, outdoor area. Or also interior construction like floors or wall design. If something really goes completely wrong during construction, you can save there before going into insolvency.

What would happen if the house unexpectedly becomes more expensive. Can we then simply cover the additional costs from our savings, or can the bank then say we have to refinance, even if we have the money?

A house always gets more expensive ;)

So of course, first top up from savings until they are used up. If that is not enough, start refinancing with the bank. However, this will have worse interest conditions and a high repayment rate, meaning it will be very expensive.

Always use equity first when available. [NAchfinanzierung] is always bad and usually more expensive.