Renovation of an apartment in the parental home - loan, without being the owner?

Hello everyone,
we are planning to renovate and modernize the apartment of my deceased grandmother on the ground floor in my parents' house (3 units in the house, apartment approx. 130 sqm).
For this purpose, we want to expand the terrace (approx. 15 sqm) to enlarge the living space of the living/dining area.
Additionally, the floors should be renewed and the bathroom and kitchen completely modernized.

We have made a rough cost estimate and, including our own labor, come to about €120,000.
I want to cover these costs alone (civil servant "higher service"), as it is my parents' house and this seems reasonable for us "just in case". My husband will of course contribute to the furniture and also provide some compensation in other ways.

We are now considering financing. Since my parents will remain owners of the house, the question arises whether this will be a problem for the loan. The house is almost paid off, the land charge is still fully registered. I could probably use this as collateral. However, it is registered with my parents' bank.
Currently, my situation is that my building savings contract (contract sum €60,000) is ready for allocation, with an effective loan interest rate of 3%. In addition, I can contribute about €25,000. I can repay the required amount in 10-12 years without major problems.

Now I am unsure how to proceed tactically smart. For a construction financing loan, I will probably have to use my parents' land charge. Can I then only arrange the financing with my parents' bank because they have not yet fully paid off the house? Or would an assignment of the land charge also work in this case if my bank or another bank offers better conditions?

In the case of a modernization loan, I have read that often no land charge is required as collateral, but the amount needed (€70,000 including repayment of the building savings contract) is probably too high for that.

I would also like to know how I should proceed regarding the building savings contract. Should I have it rescheduled by the bank if better interest rates are available there? Is this a problem or does it lead to additional costs?

I did not want to inquire at the respective banks yet before I had a complete overview of the situation, so as not to possibly jeopardize my negotiating position.

I would appreciate any experiences or tips!
Thank you!

Phew, difficult. The best way is to take out a loan with a mortgage on the parents' house if they agree. The loan is in your name, the parents are liable with the house. Taking the loan from the building savings contract at 3% is much too expensive in the low interest phase. How high is the credit interest?

Okay thanks! The approval of my parents is not a problem. The interest rate on the credit balance is 0.5%. However, the building savings contract would now be eligible for allocation anyway...

We are now considering the financing. Since my parents will remain the owners of the house, the question arises whether this will be a problem for the loan. The house is almost paid off, the land charge is still fully registered. I could probably use this as collateral. However, it is registered with my parents' bank.

Now I am unsure how to proceed tactically wisely. For a construction financing loan, I will probably have to use my parents' land charge. Can I then only do the financing with my parents' bank because they have not fully paid off the house yet? Or would an assignment of the land charge also work in this case if my or another bank offers better conditions?

Financing as a non-owner is not a problem. The existing land charge can be used. Either with the bank that financed your parents. Alternatively, partial assignment (if the new bank accepts this) or partial cancellation (the part that is not drawn down is a land charge by the owner) and new registration for the new bank.

In the case of a modernization loan, I have read that often no land charge is required as collateral, but the amount needed (70,000€ including repayment of the building savings contract) is probably too high for this.

a) your financing amount is too high and b) you are not an owner – so you are also not renovating your apartment/house. So that won’t work. P.S. There should really only be a mini-financing remaining. Because this is a prior charge for any other bank, which otherwise will not be accepted.

How much do you currently have in the building savings contract? As correctly writes, the interest rate of 3% is not attractive at the moment. I also have a building savings contract and can make special repayments of any amount at any time during the repayment phase. So, in fact, one could allocate the building savings contract and immediately repay the loan more cheaply or simply withdraw the capital. This is possible if it is ready for allocation. Basically, you already have about half of the required amount, right? So only the rest needs to be "raised."

I am surprised that no one here warns against putting money into a house if you are not listed in the land register.