Secure the property now and build in 4-5 years?

Hi everyone,

in our hometown, the inner-city building gaps are currently being closed, and today we looked at quite a few and found 2-3 "prime spots."
The man at the building authority was very friendly, gave us the contact details, and provided further information such as development plans.
I managed to reach someone directly for one plot; for 1020sqm, a proud €170/sqm is being asked. According to BORIS, it would only be €110-140/sqm in the area, but the market has been totally crazy for some time now anyway.
A soil survey would be included; the foundation selling wanted to have it drawn up anyway.

If I add additional costs, we quickly end up at €187k for the plot. That would break our neck at the moment, since we only have €60k equity.
Our idea would be to possibly buy the plot now and pay it off relatively quickly in 4-5 years. I get a performance-related bonus every summer that ranges between €15-30k. In addition, we currently have a savings rate of €1000/month, which we would of course put into repayment. According to the building authority and foundation, there is no immediate obligation to build on it.

Carefully calculated, we would be done after 5 years and would then use the plot to finance the house construction.

Before we get stuck in something that doesn't make sense, I wanted to ask for opinions here.

Honestly, we are tired of looking at the 50th house, which a) is overpriced and b) does not meet our expectations. The housing market is totally crazy anyway; four months ago we found something suitable, agreed on it with a handshake, and then were outbid by someone who put €20k cash on top...

Hello, apparently you earn well. What speaks against starting the house construction relatively soon? House prices and interest rates will not get any cheaper.

Carefully calculated, we would be done after 5 years and would then use the property to finance the house construction.

That is possible. However, you can also start earlier. The property does not have to be unencumbered to count as equity. But the type of financing needs to be clarified; if necessary, something with short-term cancellation makes sense (even if the conditions are not optimal or variable) to avoid jeopardizing the "right" financing for the house.

We have now gone through 3 banks and received about 6 opinions. Unfortunately, the property is already gone, but the foundation played with open cards saying they prefer to sell to someone who will build promptly. We would still like to pursue the plan:

Bank a says: No problem, we fix the term at 10 years with a special repayment of 5%. None of our requests were considered, well, it was the Postbank, I didn’t expect anything else from the demeanor of this gentleman. He also much preferred to push multi-family houses that his real estate agent colleague next door has.
Bank b says: We offer a quarterly updated loan, special repayments as much as you want. Interest rate risk lies with us, the loan can be converted anytime into something long-term (minimum 5 years), then however only 5% special repayment. Sounded like the best approach of all, he also advised us to pay for 2-3 years, repay as much as possible specially, and then build the house on top.
Bank c: At first this was not their standard (direct bank after all), but the advisor was very friendly, managed to get it into their Java interface and said she would build the house on top right away and finance it. She said she finances nothing under 5 years, but would then set a high closing fee so that the saved special repayments are applied as a payoff. The payoff would be relatively expensive after 2-3 years, but there is possibly room for negotiation if it gets concrete, she said.

Just wanted to note this as information in case others are looking for such topics or problems.

All three reactions are common reactions. The feasible truth lies somewhere between Proposal 2 and 3, depending on how much risk appetite you want and can tolerate.

Option 3 is: Secure - rigid.
Option 2 is: Flexible - risky.

For the general public, it should be noted: Both options are viable and must be considered individually.