Sell a new building and buy an existing property - pitfalls?

If your current bank agrees to a collateral swap, you could also transfer the loan. Then you would be able to keep the low interest rate.

If your current bank agrees to a pledge exchange, you could also transfer the loan.

Then you would be able to keep the low interest rate.

Honestly, I can't imagine that any bank would go along with this lazy swap of old for new given the "low" salary. Mathematically, you cannot service a (new) loan if living expenses are met.

550,000 house sale -225,000 outstanding loan - 25,000 prepayment penalty (amount yet to be clarified) +170,000 possible new loan

… moreover, you probably have to factor in a) speculation tax and b) definitely purchase incidental costs for the used property, which together with the property transfer tax will significantly reduce the budget. My advice: sell and rent first. A visit to the bank provides security!

Would it be an option to keep the house and rent it out and rent another existing property? It is also interesting from a tax perspective.

1. The prepayment penalty is NOT determined by the possibility of how the bank can now re-lend the money. A reinvestment interest rate (published by the Bundesbank) is applied. It should still be very low at 1% interest (depending on the remaining term). 2. Capital gains tax never applies on a sale if it has always been owner-occupied. Not after 6 months, three years, or however long. 3. If there are €470k left for a new property, between 10 and 12% additional purchase costs will apply. So, in doubt, €420k purchase price remains. Since it is an old building, probably still tens of thousands of euros will be spent for new paint on the walls, the new kitchen, and a few little things. It will therefore be a significant downgrade from the current property. If desired, then it is okay. 4. Renting out and renting anew will be absolutely not interesting from a tax perspective. With 1% interest and the low loan, there are no significant advertising costs remaining. A considerable chunk of tax will definitely have to be paid on the rent. (For example, rent €1,200 monthly = €14.4k annually. With €2,250 interest + depreciation on the house (€3k p.a.?) and a few other advertising costs, a surplus of about €7k remains. Then 25-30% tax on that is not really lucrative – especially if for the new house maybe also €14.4k p.a. rent has to be paid). 5. Almost every bank lets you take the loan with you if the value of the new house fits the financing and risk position of the bank. Just ask the bank.

3. If there are T€ 470 available for a new property, between 10 and 12% additional purchase costs will occur. So, in doubt, T€ 420 remain as purchase price. From that – because it is an older building – probably several thousand euros will also have to be spent on new paint on the walls, a new kitchen, and a few small things. So it will be a significant downgrade compared to the current property. If desired, then it is okay.

This exactly reflects my thoughts when reading the first post. Theoretically, it is very simple: Look on the internet to see what existing properties cost in your new desired region. Look mainly at properties in good condition, no renovation cases, handyman projects, or uninsulated 1980s houses. Your budget cannot accommodate unforeseeable renovation extra costs or higher heating costs. I do not know your reasons now, but maybe first move back into a rental, wait until the second child and the second salary are there? Addendum: How about monetizing the rental property additionally? Then quite a bit more could be possible.

No, we do not have a concrete offer. For around 450,000 including ancillary purchase costs and a small budget for renovations, there are properties that could be considered. We are aware that we will have to make significant adjustments compared to new construction.


The topic of pledge exchange will be put on the discussion list with the bank, thank you very much!


The option to rent initially is also under discussion. However, it would only come into consideration if a purchase is not feasible or no suitable property can be found within period x.


Renting out the new building is not profitable or the required rent cannot be achieved, as it is a rural area.


Thank you very much for the explanations. We are aware that this would be a significant downgrade.


Thank you very much to you as well. We are aware that we are in a situation that may not be understandable under certain circumstances, but I do not want to go into the reasons further. The existing condo is not to be sold, as no additional capital is to be "added". There are still other reserves with which the project could be implemented. However, we want to consciously exclude this to get an assessment of whether and how it would be possible under the given circumstances.