Withdrawal from the loan agreement

Dear forum,

we are currently in the offer and collection phase for our house building project. We want to build in an area yet to be developed (current status: disclosure of the development plan in December).

Status:
The plot is reserved, the notary contract will be signed in the next few weeks. A right of withdrawal is provided for us (in case of negative changes in the development plan or delay in the development, fixed date) and for the development carrier (if costs increase, without date).

Accordingly, we have negotiated a contract with a general contractor that also includes a withdrawal clause (same date!).

Only with the financing it seems not to be possible - says our house bank - and suggests simply waiting until the development plan is approved. This is planned for spring/summer 2013. However, with the start of the development, a first installment becomes due (75%), i.e. I have little time to compare financing options.

Questions:
- Are there generally providers who allow a cost-neutral withdrawal?
- How long does it take, in the best case, from request to signing once all the figures are available?

DaveS

Perhaps as an addition: I want to include Kfw, possibly Riester (currently my house bank is still advising against it) - i.e. the deadlines here (?) also have to be observed. Since the development has already been postponed twice, I don’t want to take any risks and will only give the "go" once the development plan is legally binding. DaveS

Since the bank refinances itself, there cannot be such a general right of withdrawal clause there. If a loan agreement is repaid prematurely/out of schedule, the bank may incur a loss which must be compensated = prepayment penalty or in this case non-acceptance compensation.

Waiting with the financing or with the financing commitment until spring means full risk. The lender reviews and decides at the time of the financing application. The financing review in spring could therefore also result negative, so that you do not receive financing. The contracts with all other parties involved, e.g. with the [GU], should also contain a right of withdrawal clause in this respect.

Thank you Georg for the answer,

so far I have no withdrawal clause regarding the financing in the notary contract (land purchase), but I do have one with the general contractor. However, the development agency only reserves the land for a limited time. I probably have no choice but to sign the notary contract as it is. The first (non-binding) review by the house bank for the entire project was positive.

I want financing for both projects (house and land). The following questions: what else can I do to reduce the risk:

- Can I already push the whole thing to signature readiness (including bank review) – but then wait to sign and, if necessary, resume from this old status in spring/summer (ideally only the interest rates need to be adjusted) or secure an option for myself?

- The first installments are only due in May-July (land), and construction will then take place, in the best case, by the end of the year; assuming this timing, when should I restart/renew the financing? So far, I have estimated three months.

Regards,
Daves

The financing therefore requires two steps: first the land and later the house construction. It is important to ensure that the fixed interest periods of both financings end on the same date. This is important so that you have free choice of lenders again when the loan is prolonged. If the expiration dates are different, you are in a tight spot and many lenders have already taken advantage of this.

You can clarify the financing with the bank from today's perspective. The signature will then take place in half a year. However, the bank will conduct another credit check according to the criteria applicable at that time. Here lie the risk factors: both your creditworthiness and the bank's criteria may have changed by then. Basel III is making progress.

In a construction project, it is not uncommon for the construction period to take longer than planned. Do not set the interest-free standby period too short. 3 to 6 months are standard, but many lenders also offer 9 or 12 months. It is better to agree on a longer construction interest period than theoretically needed. And also include the construction interest in your calculations. This item is often forgotten.

current status: Disclosure of the development plan in December

We have building areas here where it takes another 10 years. Has the land reallocation already been completed? (It actually has to be, otherwise the plots shouldn’t be sold notarized?) Complaints and objections can still be made against the development plan?! Then spring / summer 2013 will quickly become mid 16 / 17.