When will I receive the money from the loan agreement?

Hello dear home builders,

I have a question and would like to briefly explain my situation to you. We will take out a loan of [Summe X]. We also have equity.

Now my first question: if I sign the loan agreement on March 1st, do I receive the money immediately or must my equity be used for the construction project first?

The loan will be structured contractually so that we only have to pay the agreed interest + principal repayment monthly after drawing the full amount. Before the end of construction, only interest payments are due.

Now my second question: When does the interest payment period begin? On March 1st (assumed signing date) or only when the money is made available (if this is not the same time as the signing date, see question 1)?

Thank you for your answers. Best regards from Munich

These are things you discuss with your bank. Every bank handles this differently, and every advisor has some leeway.

We had a contribution-free period of 9 months starting from the signature; after that, the interest payments began. Fortunately, we were able to extend this by another 2 months. Repayment then starts after the full disbursement. We used the equity capital first.

Usually, equity should be used up first, then debt.

For drawn debt, interest is paid proportionally.

For undrawn debt, commitment interest is paid once the commitment-free period is over.

That depends on your bank. We can save our equity until the end, but that is not always the case. Likewise, the point at which you have to pay commitment interest varies. The regular interest is paid on the portion that has already been disbursed.

Hello, thank you very much for the response.

So do I have to inform the bank when I need the money? Or does the disbursement of the debt capital happen automatically, since I can simply pay invoices from account X where the debt capital is provided?

What about tied equity capital (building savings contract) that might be liquidated too late? Is it then possible to use one's liquid equity capital, take on debt capital proportionally, and when the rest of the equity capital has been liquidated, use it until it is exhausted, and then again use the remaining debt capital to complete the construction project?

So with us, it is such that we do not have direct access to the loan money ourselves. Part of it is paid out directly to our [GU], and for the rest, we can submit invoices/cash receipts, and it is then either transferred directly or the money we advanced is reimbursed to our account, so that our equity capital is effectively replenished. This way, of course, we can decide at any time what we really want to pay from equity capital (simply not submit the invoices but transfer from our account) and what from the loan. But as I said... it may be regulated differently for you. I do not know how it is with money from [Bausparern].