Subsequent financing is necessary if surprising additional costs arise during the construction of a house or the modernization of an old property that were included in the original cost plan. Refinancing is a delicate issue and often relatively expensive. And the higher the need for refinancing, the greater the likelihood that the entire financing "kipppt" (ie is no longer affordable). The main reasons for additional costs and thus the need for refinancing are poor planning, surprising additional costs (z.B. due to the constantly rising cost of materials), but also a lack of cost discipline.
What is so difficult about refinancing?
What makes refinancing expensive and complicated is the fact that banks have to treat and process each refinancing as a completely new financing transaction. In addition, the additional costs usually do not increase the value of the property initially set by the lender. This can be especially problematic if the original financing has already reached certain lending limits. Quite a few banks reject refinancing solely because the overall financing (incl. refinancing) are no longer within the loan-to-value range that is feasible there. And then to find a second bank that is willing to take on a sog. "subordinate" security in the land register is satisfied, is difficult.
Many refinancing deals are within a range of approx. 15.000 to 40.000 euros. This is also a problem for many lenders, because often the amount is not enough for a construction financing loan.
Refinancing is most difficult when the additional installment burden exceeds the borrower's budget and the total installment is no longer affordable from the bank's point of view. Therefore, property buyers and builders with a tight monthly budget must be particularly careful not to let costs get out of hand.
What are the options for refinancing?
The first point of contact for refinancing should be the bank that has already taken over the main part of the financing. As a rule, this bank has no interest in the house not being completed. This becomes problematic if the existing financing is already at the limit (both in terms of the loan-to-value ratio and the affordability of the financing installments).
If the already financing bank does not play along, there are various other possibilities to close the financing gap. These are in particular sog. Blank loans from building and loan associations, so called "home loans". Owner loans or installment loans with long terms. What they all have in common is that these loans/credits are not secured by a land register (i.e. they are "blank", i.e. without collateral).
Here we have an overview of various options and providers. If you're interested in getting a personalized quote, feel free to use our online inquiry or contact one of our partner offices in your area directly.