Construction financing: Couples or families who realize the dream of building a house often underestimate the ancillary construction costs. Yet these amount to as much as 20 percent of the actual house price. Which additional expenses are incurred, how these can be planned for in the best possible way and in some cases even saved: here is an overview.
Building or buying your own home is a big step and needs to be carefully considered, as it involves high investment costs. However, if you want to fulfill your dream of owning your own home in the countryside, you should not only consider the construction or. Consider purchase costs. There are also other costs that are not directly included in the price of the home. These ancillary construction costs are additional expenses that must be added to the actual property price. These include, for example, notary fees, broker fees or the land transfer tax, but also costs for the design and construction of the house.
Due to material and supply bottlenecks for building materials such as steel, glass, wood, sand or chemical substances, ancillary construction costs have risen sharply in some cases in the course of the Corona pandemic. But even independently of this, the ancillary costs have a not inconsiderable influence on the amount of financing required for a home of one's own and must be calculated accordingly when building or buying a home.
The amount of the ancillary construction costs varies depending on the federal state, the size and condition of the property, the individual wishes and the purchase or sale price. Construction Price. Typically, the additional cost is about 15 to 20 percent of the property price. That is to a building project, which with 300.000 euros, up to 60 % of the total amount of the loan can be repaid.000 euros in ancillary construction costs.
Avoid unforeseen costs
The ancillary construction costs must be included in addition to the real estate price in the case of construction financing. It is therefore all the more important for borrowers to make sure that they are aware of these costs before actually buying the house or. building project an overview of the possible ancillary costs, in order to arrange their finances clearly. Experience shows, however, that the ancillary construction costs are often underestimated by future homeowners. For this reason, credit experts recommend that borrowers seek professional assistance in their search for suitable financing.
All potential ancillary construction costs must be included in the financing sum
An equity share of 20 to 30 percent of the purchase price is recommended. Because the more money is already available, the lower the interest rates of the bank will be. However, a real estate loan without equity is also possible, whereby, in contrast to 100 percent financing, the additional costs are already covered in 110 percent financing. When choosing suitable financing, the financial experts also take into account the option of subsequent financing. Due to the variety of offers, they help to choose a loan with which the refinancing is possible free of charge and is not associated with higher interest rates and a lending limit.
An overview of the ancillary construction costs for building a house
Depending on whether a house is being built or purchased, the ancillary construction costs incurred can be very extensive. In a construction project, the additional costs can be broken down in terms of the different phases of construction. In addition to the costs for land and house (construction), there are other hidden and not always openly communicated expenses.
1. Incidental construction costs when buying land
– Brokerage fee
– Land register entry
– Notary (fee for purchase contract and land charge entry)
– Land transfer tax
– Development costs for the road
If builders commission a broker to find a suitable plot of land, fees of between four and seven percent are payable depending on the region. In addition, notary costs for the purchase contract and the entry of a land charge. A land transfer tax of between 4.5 and 6.5 percent, depending on the federal state, is payable to the tax office on the purchase of a property. The municipality or. City also charges for entry in the land register.
2. Costs for construction preparation
– Building permit
– Construction contract review
– Planning (e.g.B. architect)
– Soil expertise
– Demolition costs and tree felling
– Construction road
– Connection of building water and electricity
– Earthworks (excavation for basement and floor slab)
– Removal of accumulated soil
– Development costs (surveying, gas, water, electricity, telephone, cable TV)
The ancillary costs in the preparation for construction relate to the preliminary work for building the house and can be very extensive, depending on the plot of land and building project. In order to obtain a building permit, a building application must first be submitted to the relevant administration. Otherwise high penalty payments and a compulsory demolition threaten. In addition, there are costs for site development, planning by an architect, any tree felling work and demolition costs, as well as expenses for the disposal of demolition debris and excavated soil.
3. Incidental construction costs during the construction phase
– Insurance policies
– Building survey
– construction supervision
– Financing costs
During the construction work further additional costs can arise. If building projects are accompanied by building experts, costs are incurred, for example, for the construction supervision and the building report. In order to effectively protect yourself during the construction of the house, insurance is also required. The most important of these include construction performance insurance, which covers unforeseen damage, fire insurance and builder's liability, which covers damage caused by people involved in the construction of the house. If builders undertake house construction on their own, the premiums for builder's liability are significantly higher than if a company is commissioned for the construction work. Last but not least, ongoing costs such as commitment and construction period interest arise due to the financing of the construction project.
Construction period interest includes all interest accruing on real estate financing during the construction phase. They are made up of debit interest for portions of the loan that have already been paid and commitment interest for portions of the loan that have not yet been drawn down. These increase in particular in the event of construction delays – for example, due to the pandemic, many property owners were recently affected by higher commitment interest rates as a result of the material and delivery bottlenecks.
4. Incidental costs after home construction/purchase
– Exterior facilities (z.B. Create a garden)
– Interior finishing
– Costs for repairs, renovation, modernization
After completion of the construction of the house, future homeowners will have to pay additional costs for the design of the outdoor area, for example, if a garden is laid out or a carport is erected. The interior fittings and interior design also count as ancillary construction costs. In the long term, expenses for repairs, renovation or modernization must also be planned for. When financing, these costs should be taken into account. If the necessary capital is lacking in such cases, this can be frustrating and worrying for homeowners.
Reduce financial risks and plan for ancillary construction costs in advance
Incidental construction costs represent a risk to home financing that should not be underestimated. If they are not taken into account or if they are set too low, incalculable additional costs will arise that may exceed the amount of the construction financing and make additional financing necessary. It is therefore important for borrowers to plan for all additional costs incurred as early as possible. Checklists are recommended to have reference points for calculating ancillary construction costs and to keep track of them. While it is almost impossible to calculate additional expenses to the penny in advance, a thoughtful approach is more likely to bring the calculation closer to the actual value. Based on this, borrowers can determine the required financing amount for a construction loan more precisely with the help of experts.
Checklist: Saving additional ancillary construction costs
Already with the choice of a suitable real estate loan owners can pay attention besides to the option of a free Nachfinanzierung, in order to close in case of need without additional costs financial gaps. Even with a high equity ratio, it is easier to absorb underestimated ancillary construction costs. In addition, there is the option of keeping ancillary costs as low as possible through potential savings on items such as the following:
– Real estate agent costs: buy property without a real estate agent
– Costs for the outside plant: Garden in own contribution put on
– Insurance costs: find out in advance whether the homeowner's insurance already includes construction insurance
– Construction costs: obtain quotes from different service providers at different stages of construction