Real estate loan - bank's right to participate

Therefore, we are optionally planning to buy first. With a small credit buffer & then have it assessed and take out the 2nd loan.

It is and remains nonsensical.

The question is: How does the bank calculate the value of the property if we demolish the house.

Only the bank financing it can tell you that. If they know you are demolishing, only the land value remains. If they do not know and you still demolish, it can (will) lead to loan termination.

The property fits very well. There are only a few left here & we have no building obligation. We will then repay the loan again for a few years. It will take 4.5-5 years. And then build up equity again. That takes longer . Meanwhile, the property serves for relaxation with a bit of greenery. But nothing major is supposed to be built there.

So you are buying a property just for fun at first and indebting yourself for it. And at some point maybe, or maybe not, something will be built on it. Also nonsensical. You do that if you have money left over, but not on credit and when finances are tight.

The approach is very clumsy. You unnecessarily tie yourself to a bank with the loan for a demolition, which can then dictate unfavorable conditions for you.

Do it like this:
Only buy, no demolition. A manageable loan, pay it off quickly and after a few years you are free.

If you then want to build, you take out a new loan for the new house including demolition. The advantage is, without an existing loan and mortgage, you can freely choose the bank and perhaps secure much better conditions.

Also consider one thing: if you eventually don’t want or can’t build, you have paid for a demolition, paid interest, and put in work without any increase in value. For you, the house may have a negative value, but objectively it may still have a residual value that can be sold.

Is and remains nonsensical.

The problem is that we cannot estimate the exact amount the demolition will cost anyway. So the idea is to buy the house first, then the demolition contractor can better say what it will probably cost.

So you buy a plot just for fun and get into debt for it. And maybe, or maybe not, something will eventually be built on it. Also nonsensical. You do that when you have money left over, but not on credit and when finances are tight.

Who doesn’t go into debt for a plot of land. If we want to save up for it beforehand, then we are old. That way we can already use the plot as a garden. Sure, that’s fun again. But a house would be fun eventually too. We already have shelter.

The approach is very unskillful. You tie yourself unnecessarily to a bank with a loan for demolition, which can then dictate terms disadvantageous to you.

What kind of disadvantageous terms do you mean? They are not allowed to dictate that we have to build a house on it.

Who doesn't go into debt for a piece of land.

Most home builders do. With the small but crucial difference that they don’t do it for fun like you do, but because they want to build a home. I can invest my money more sensibly than Max can by buying a plot of land usable as a garden and even maintaining it financially. The land also costs ongoing maintenance next to the loan. And any appreciation in value, if at all, first has to recover the incidental purchase costs so that you don’t make a loss. Therefore, I stick to my view that your project is total nonsense from a rational standpoint. And even buying a teardown house initially as a hobby is not really understandable.

What kind of disadvantageous conditions do you mean? They are not allowed to require that we must build a house on it.

That means you choose financing with a land charge. If you want to build later, no other bank will give you a loan because the first rank in the land register is occupied. If by then the land loan has not been repaid or refinanced (the remaining debt should be at least under €50,000), you are tied to the bank and they can basically impose whatever conditions they want on you.

There are also land financing options without a land charge! Even over €80,000 and with only slightly worse conditions than classic construction financing.

Oh, I see. So then we would just finance a house without a mortgage. Although the offers are worse. But we want to pay off the loan first anyway. In a few years it will be paid off & then new capital will be built up for the time being.