Variable loan possible / sensible?

We are currently running through the possible scenarios/financial options a bit. My husband also considers the variable loan as a possibility, I have some concerns and questions, "what if."

Now assuming our net equity remains the same for some reason (which is highly unlikely, but let's take it as a worst case). And we have paid off about 40K within 2 years (target repayment is higher, but just for assumption). The construction costs have increased by 10% during this time (5% p.a. the current increase trend???). Will a bank finance the construction at all with a 100-120K remaining debt? It is different with the land amount than if you finance 40-50-60K variably and have good chances of full repayment.

Either way, it is somehow tight. Or do banks also calculate the current land value at the time as equity? For example, if the land value increases during this time.

I have some concerns and questions, "what if".

If everything goes down the drain, the property will simply be sold. If you don’t have enough income for the construction, the property will simply be sold. If you suddenly have to move, the property will simply be sold. Where is the problem?

Or do the banks also calculate the current market value of the property at the time as equity? For example, if the property appreciates during this period.

We have already answered that with "Yes" 127 times. Property value minus outstanding loan = equity.

If everything goes down the drain, the property will simply be sold. If you don't have enough income for the construction, the property will simply be sold. If you suddenly have to move, the property will simply be sold. Where is the problem? We have already answered you that 127 times with "Yes". Property value minus outstanding loan = equity.

That is clear to me, my question is: do the banks then take the current price of 162,000K or the property price at the time of the construction project as the property value?

Just so you know, the land alone doesn't pay off even with 2 to 3 years of clenching your ass, as was written here. With a pure repayment of 1400 euros per month, you’re still paying on it for 10 years. But I guess you want to pay off the construction loan sooner, right? Then regarding the child, we had three newborns in the family last year. And it didn’t get any quieter at anyone’s place. On the contrary, money became tight, nerves as well, and if you don’t have a grandma nearby who has all day free, working after one year will also be difficult. And then a construction site on the side and financial bottlenecks for years. That really kills the joy of life right away. And you write "salaries can only rise," so in the current situation I would be cautious with that statement unless you’re a shareholder at Amazon or the Post ;-) Because for a loan over 500,000 you just earn too little. That’s a fact.

I have some concerns and questions, "what if".

...Will be sold.

That is clear to me, my question is: do the banks then accept the current price

What does the bank have to do with that? You sell to another who earns more and hopefully then pays more for the property. And you can pay off your variable loan.

Just as a side note, the land alone does not pay off even with 2 to 3 years of gritting your teeth, as was written here. With pure repayment of 1400 euros per month, you’re still paying on it for 10 years.
But I guess you want to refinance the construction loan earlier, right?

Then about the child, we had three newborns in the family last year. And it didn’t get quieter for anyone. On the contrary, money got tight, nerves anyway, and if you don’t have a grandma nearby who has time all day, going back to work after a year is going to be difficult. And then a construction site on the side and financial bottlenecks over years.
That really puts joy of life at zero.

And you write “Salaries can only rise,” so in the current situation I would be cautious with that statement unless you happen to be a shareholder at Amazon or the post office ;-)

Because for a loan of 500,000 you simply earn too little. That’s a fact.

I don’t want to discuss the situations with children now as they can be as individual as one can imagine. I am referring here to our previous lifestyle and can definitely exclude that we will now be spending 500-1000€ each month on weekend trips with the newborn baby. I can say from myself that it will no longer be like that.
Also the statement that you can’t return to work 15-20 hours per week with a 1-year-old child... I am already working part-time, so I assume that the income won’t be less or only slightly less until the child turns 2 and goes to kindergarten. But I don’t want to go into that further.

It is clear to me that the land cannot be paid off with that amount of money. That’s why I also ask questions about the residual debt. And about the meanwhile increased land value, which I strongly assume despite the current Corona crisis.

At first glance, it seems quite logical to me that it is better to save for land than to keep money in the bank account.
Regarding salaries, I know some who own condominiums and earn far less than we do. In my opinion, it’s much more about how you manage your finances and what you’re willing to do for the goal of your own home / house.

The problem from my point of view is that in the case of interim financing, we want to build fairly soon: that means 2-3 years and not 10.