Land finance calculator
Free and non-binding property financing comparison. As a financing reason please choose “construction of a property”.
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Property financing interest
The dream of owning a home can be fulfilled by the future owners in three ways:
- They are looking for a real estate property in the real estate market, which comes closest to their conceptions in terms of location, size and price.
- The second solution would be to buy through a developer. In previous years, two sales contracts were concluded in this case. One over the property, one over the property. The background was that the real estate transfer tax only applied to the property. However, the tax authorities have now put a stop to this procedure. If the acquisition of land and the start of construction are close in time, the land transfer tax is due for the entire purchase price.
- But there is also a third option. The purchaser plans to build sometime, but would like to secure the appropriate property early. In this case, he initially purchases only the property. It is nice for him if he can pay the purchase price in one sum. But if he has to finance the purchase price, things can get critical. First of all, the value of the land depends on whether it is still pure meadow land, whether it is already a building maintenance land or has already been designated as building land. The old rule that a property is only mortgaged with 50% of the mortgage lending value is no longer valid. However, the lending approaches for undeveloped land and soil are diverging at the institutes.
In addition to the badge of use, the location of the property also plays a role. Pure arable land in the rural area will have a lower mortgage lending value than the land next to it, which is already farm maintenance land. A fully developed plot in the outskirts of a city costs much more, but is also borrowed higher.
Property financing – comparison not only shows interest
Against this background, not only the interest rate plays a role in the selection of a financing bank, but also the amount of the mortgage lending framework. The cheapest interest rates use the acquirer only a little if he has only over 30 percent of the purchase price of cash, but the bank only lent a maximum of 50 percent. He therefore needs an institution that accepts a higher mortgage lending rate.
In addition to the purchase price, the ancillary acquisition costs for the property are added. These vary from state to state, as both the amount of land transfer tax and the maximum brokerage commission are a matter of state. In addition to these two positions, there are still expenses for the notary and the court for the transfer of ownership. In the worst case, the buyer must expect additional costs of up to 16 percent. The formula for the classic real estate acquisition, the buyer would have to raise even 20 percent of the purchase price plus the acquisition costs, does not apply in a pure land financing.
In light of the more complex determination of the mortgage lending value, it is definitely advisable to make a comprehensive comparison of the property financing.
Consider development costs
If the property is designated as building land and already fully developed, this has the advantage that the buyer pays the effort in the purchase price, but he will be spared later surprises. The following development costs may apply:
- Connection to the power grid: 2,000 euros to 3,000 euros
- Connection to the gas network: about 2,000 euros
- Water connection: 2,000 euros to 5,000 euros
- Telecommunication: 1,000 euros
The costs are very different, especially in the case of water, from one community to another. The development status plays a decisive role in the mortgage lending test. If the property is not yet developed, the purchaser may not disregard these costs in the later financing. Above all, it is important to note the fact that the building permit is issued only if the water connection is available.