When to use equity?

Interesting variant.

It certainly also depends on your risk tolerance; it's certainly not for everyone. But with a financing confirmation, I would set the probability of a complete failure close to 0.

Where can you get a financing confirmation without a loan application? I actually believe that we had a competent financial advisor, but that was not up for discussion. No financing without a loan application and no financing confirmation either. And signing a construction contract without secured financing, I really find very risky.

My knowledge is different on this. A financing confirmation can be issued by any institution, provided that you are creditworthy for this credit institution. Nothing more is certified with it. For the property purchase that I am currently dealing with first, I also have to submit a financing confirmation to the property marketing company. My house bank (Sparkasse) would do this immediately as well – because they WOULD also conclude a loan agreement with me. But I do NOT HAVE to conclude one there. This financing commitment is only an institution-independent assurance for the property seller that the buyer also has a financing basis. ...at least, that is how I understood my various advisors...

Where do you get a financing confirmation without a loan application?

From the credit institutions where your advisor requested the terms for your specific construction project.

I actually think that we had a competent financing advisor, but that was not up for debate.

I cannot and do not want to judge the competence of your financing advisor. I would never have thought of it either; our financial advisor brought it up that way. I would be lying if I said I felt 110% comfortable with that. But the success proves it right. Maybe the interest rate trend was rather unclear at the time of your closing. At our time, a downward trend was probably foreseeable, so that the approach of the financial advisor saved us a nice five-figure sum. But as already mentioned, I don’t want to generalize such an approach and suggest it to everyone. But it’s something to think about.

No financing and no financing confirmation without a loan application.

Our financial advisor requested financing terms for our project from more than 10 credit institutions. If I remember correctly, all came along with corresponding offers and from all we received either the (of course non-binding for both sides) informal financing confirmation or the assurance that the financing offer could be understood as such a confirmation. Fun fact: The financing confirmation we presented to our BU (which honestly didn’t even interest him) is not from the institution that actually financed later.

And signing a construction contract without secured financing, I really find very risky.

If about 10 institutions are willing to finance, where is the residual risk? Didn’t you have relatively high equity?

Yes, we did. Possibly the financial advisor was not as neutral as he claimed. And at the time of the conclusion, we also expected a collection within 12 months.

Maybe the financial advisor was not as neutral as he pretended to be.

Fee-based advisor or one who earns commissions on the products he mediates? If the latter, it should be obvious where the financial advisor's interests lie and how "neutral" he acts.