Right of withdrawal from the loan in case of missing building permit

That comes first

Chicken or egg?
What can I afford? - What am I allowed to build? - What can I afford? - ... In the end, it's also a circle, almost no matter where you start. Maybe you can understand it as an iterative process.

In other words:
If you want to build or buy a house, you have to start a planning process that essentially involves three aspects: land, house, finances. Everything conditions each other and planning always costs! At the beginning only time, but eventually also money, first a little (maybe a book or travel expenses), later more when actual work is done (soil survey, preliminary building inquiry). As life goes, there will also be disappointments and the time will come when you have to make serious decisions (usually without knowing what will actually come out at the end).

Now the question: is there a way to structure the loan agreement so that we can withdraw from the contract if the building permit is not granted?

Hello Nico,

as already described, the bank can only disburse money if there is a corresponding value in return. Without a building permit, the property is a castle in the air – would a bank, for example, pay out €250,000 before the building permit and you then do not build at all because you are not allowed to ... what would secure the loan then?

You can see, that is not possible.

Usually, loans are disbursed according to construction progress, i.e., when the earthworks are completed, you receive an invoice for, for example, €20,000, submit it to the bank, then withdraw, for example, €25,000–30,000 from the loan into your construction account and pay the earthworks and some small invoices from it. When the next large invoice comes and the corresponding house value is created, it continues.

In this way, it is somewhat ensured that construction progress and current loan burden match and you do not, for example, have the entire loan amount tied up on a half-finished shell.

What you can do is secure loans or conditions in advance if you suspect interest rates will rise again. But this is only interesting for people who will definitely build within a certain period or for professionals/semi-professionals who are always looking for land/properties. But disbursement can only take place once the property is also purchased or approved; otherwise, you may have to pay penalties or further commitment interest if you do not build or buy a property within the anticipated period.

Best regards
Dirk Grafe

Ok, thank you very much. We were only concerned that we do not sign a loan agreement, the building permit is not approved, and we are financially ruined because we have to pay for a house that does not exist.