Construction financing is one of the most important pillars of the construction project, if not the most important. For this reason, it was clear from the beginning that convenience would be the wrong choice here.
Building a house is a lifetime project, so the accepted conditions should already be reasonable. Generally speaking, if you accept the first offer on a construction loan, you won't get the best deal for yourself.
Information about Volksbank Lubbecker Land eG
To get an idea of the conditions, we decided to make an appointment with Leonie's house bank. This is the Volksbank Lubbecker Land eG. With the financing consultant we had already approx. 4 years of contact when we wanted to buy a property. In this new appointment, we set the course for the financing modality.
We decided to split the financing into two loans. Once in a KfW loan 153 – energy-efficient construction over 120.000€, with a subsidy of 18.000€ if the KfW 55 standard is met. Since the surcharge at Town & Country ca. 19.500€ costs, it was quickly clear that we would like to take advantage of this KfW loan. The KfW offers relatively favorable conditions, but only with this subsidy of 18.000€ became interesting for us. Through the KfW you bind yourself to a fixed period of time, which is not changeable. In this case, no unscheduled repayments are possible. Thus one is relatively inflexible with this variant.
For this reason, we opted for a more flexible option as a second loan. After rough calculation, we decided to set the loan amount at 190.000€ and to raise the rest of the money through our equity capital. Generally speaking, there are banks that offer 100% financing, however, such a variant is not recommended, because the interest rates are "extremely" high compared to a normal financing, in which the equity is included. The Volksbank's financing consultant advised us very well with his human manner. Based on his advice and experience, we settled on a 15-year loan term for the 190.000€ loan agreed with a 10% unscheduled repayment option. With the 15 years fixed interest rate one is halfway on the safe side and with a 10% special repayment we could pay off the loan very well, if we should actually succeed in doing so.
The effective annual interest rate at 15 years fixed interest rate at Volksbank was 1.21% for the first offer. In conclusion, we can say that the Volksbank has done a good job with the consultation. We used this offer for comparison with the savings bank and CHECK24.
Information about Sparkasse Minden-Lubbecke
Next, we arranged a personal appointment with Sparkasse Minden-Lubbecke. We went through all the points again with the financial advisor there. He noticed that we already had experience and thus accelerated the conversation. So that the offers were comparable, we had of course given the same information as in the conversation with the Volksbank before. Further down the line, we were then verbally quoted an interest rate of 1.40%. When we mentioned that this was not interesting for us because we had a better offer from the competition, we were asked if this was from the local competition. We confirmed this, then we were informed that a more concrete offer would be discussed with the team leader.
One day later we received a new offer from the Sparkasse with an effective interest rate of 1.20%, with 3.0% commitment interest. In conclusion, it can be said that this advice was sufficient. Without the experience already gained, through the appointment at the Volksbank, the appointment at the Sparkasse Minden-Lubbecke would probably rather be described as deficient. Under these conditions I would not have felt well advised. The competing offer (of the Volksbank) was also mentioned by us only when we were through with all points, so that this could not take influence on the discussion.
Information about CHECK24
Since we wanted to get the best interest rate for our conditions, we next arranged a telephone appointment with the construction financing advice of CHECK24 for further consultation. At the beginning of the phone call, we were asked how specific our request was. We mentioned that it was a very specific request and we could sign the contract of sale to build a house. The financing consultant from CHECK24 then went through with us the details we had already given online and added further details. Subsequently, we were provided with a PIN by telephone. With this we were able to connect to his PC via a link from the appointment email. So we could talk together about the offers.
In the overview, we were shown the ING-DiBa with an effective interest rate of 1.02%. But this was only half the truth. This effective interest rate was calculated as the average of the KfW interest rate of 0.95% and the real offer of the ING-DiBa of 1.07. Thus the presented result was nicely calculated for us. In general, we did not feel well advised in the telephone appointment. It gave the impression that the financing consultant wanted to finish this appointment quickly. He responded to questions in a partially annoyed manner and did not explain more detailed inquiries to us in sufficient detail/understanding. This was a reason to question the conclusion of the contract via CHECK24, although the offer was the best at that time. After this telephone appointment, Leonie was unfortunately already somewhat negative to conclude a construction financing over an "online bank" on the basis of a telephone consultation. We first had to process this telephone appointment and slept on it for a night.
Information about the ING-DiBa
Subsequently, we came to the conclusion that we wanted to arrange a direct consultation appointment via ING-DiBa due to the best interest rate. Leonie called the same day at ING-DiBa and spoke with Ms. Silvia Schmidt. Ms. Schmidt took our rough data by phone, which was needed for the financing and arranged another telephone appointment for two days later.
In this phone call, we explained to her that we already had an offer from ING-DiBa from CHECK24, but we did not feel well advised. Mrs. Schmidt guided us through the consultation with an incredibly sympathetic manner. Even when asked several times, she reacted very calmly and always in a friendly manner and gave us the impression that she was happy to be able to help with her statements. Also with the ING-DiBa we switched ourselves over a link on the PC of Mrs. Schmidt and could discuss so the offer of the ING-DiBa. The ING-DiBa offered us also here an effective interest rate of 1.07. On closer inspection, however, the conditions were better than those previously offered by CHECK24.
We thanked Ms. Schmidt for the great advice and praised her for it. Also, that we found this telephone conversation better than the personal consultations at the other banks. Such great advice must first be achieved over the phone, when the facial expressions and gestures from a personal contact are missing.
In the following days we went through our calculation in detail and then had to have the purchase price for the financing corrected upwards, because we still changed something in the special equipment. Finally, we decided to include more equity in the construction financing. This had the effect that after contacting again, the effective interest rate was lowered to 0.97%. We then decided on this offer from ING-DiBa and Ms. Schmidt and submitted the required documents by e-mail.
Due to the Corona/Covid-19 situation, we were given a processing time of ca. eleven working days communicated. After just eleven days (incl. weekend) we received the promise for our financing from Mrs. Schmidt by E-Mail.
Two working days later we received the contract documents by mail. In the first moment this aroused in us a joyful feeling, since the point house building seemed to be more real. In the second moment, disillusionment spread, as the conditions in the written contract offer did not match the conditions offered in the consultation meeting. After a short phone call and another processing time of three working days, this point could be clarified. The corrected contract documents were then sent to us again.
Overview of financing offers (without KfW)
- 0.97% eff. Annual interest rate for 15 years
- 12 months interest free provision
- Repayment rate selectable between 1% and 10%
- 2x free adjustment of the repayment rate
- Positive: One contact person from the first contact to the conclusion of the contract
- Evaluation: very good telephone advice from Ms. Silvia Schmidt
- 1.17% eff. APR and 1.21% eff. Annual interest for 15 years
- positive: offer was improved because of counter offer
- Evaluation: good advice and support
- 1.20% eff. Annual interest for 15 years
- negative: 3% commitment interest
- Evaluation: Consultation meeting has proceeded sufficiently