berater1
2020-05-24 21:04:34
- #1
Hello,
we have decided to build again and sell our house built 14 years ago. We expect to get approximately 300,000 euros for this house (40,000 euros remaining debt).
We have 180,000 euros in equity, which is to be used to buy a plot of land.
For the house, we initially calculate costs of 350,000 euros including incidental costs. Thus, we would need to finance 100,000 euros as an annuity loan.
The problem now is the missing approximately 250,000 euros, which we will only get once the house is sold. However, we would have to move out and rent an apartment in the meantime.
Are there other possibilities? The bank surely will not lend us 250,000 euros that we have to repay all at once in one year, right?
Has anyone here done this before? Do you have ideas on how to approach this?
Option 1: Loan with 5 years fixed interest rate
Especially in uncertain Corona times, I consider option 1 with “only” 5 years fixed interest rate attractive. You are not exposed to a big risk, it has a short term, and in case of rising interest rates, after 5 years you can invest the entire 250,000 euros. Because at the end of the term, you are free to decide how you repay. You can extend and include your full 250,000 euros (free of charge) in the extension.
If the house (theoretically possible) loses value after 5 years, a generally very cheap interest rate can be possible for the remaining amount, since the collateral will probably be above 80%. This will allow dream interest rates anyway.
The biggest advantage is the flexibility and the quasi non-terminability within these 5 years.
Option 2: Bridge financing
As mentioned by other users, bridge financing can be possible. Since a bridge financing is usually concluded for a maximum of 24 months, certain risks can still arise especially now during Corona times (deflation, inflation, short-time work, low buyer interest, etc.).
Practical note:
Loan: The best contact for loans is an independent broker. Current interest rates in your case should be around 0.4-0.5% effective interest (rough estimate).
For bridge financing, the contact person is the house bank. Bridge financing will probably be much more expensive. Unless you are regular customers at your bank and it is willing to compete for you. Then a cheap financing at the house bank would also be possible.