Construction financing: comparison, components, ancillary costs

Construction financing – A construction financing differs from the classic consumer loan by the more favorable interest rates and the longer term. In financing, the property serves as collateral. The debt is entered in the land register. If the installments can not be serviced on time, the bank has the right to cancel the real estate loan and foreclose. In this case, it gets back its money or a large part of it. Thanks to this deposited collateral, the bank has the possibility to grant more favourable conditions for real estate financing than for a consumer loan granted without the deposit of collateral.

Construction financing – comparison of different providers is important

If you would like to find out about the options and details of construction financing, real estate agents offer you individual advice. If you would like to sell your property, real estate agents are there to help with a package of services. Estate agents know their way around the market and bring experience to the job. You benefit from individual support and a stress-free sale of your property. When it comes to construction financing, an agent can also help you with your planning.

Individual construction financing from various components

Many property buyers avail construction finance as the amount cannot be settled in one lump sum. The financing for a property should be safely planned in advance. Take advantage of an individual consultation, because a financing plan is always adapted to the situation of the builder. It stands on various pillars. This means that a property is not usually financed with just one loan. A combination of existing equity, a development loan, a building savings contract and the classic bank loan are the components of a financing. It is important to compare the different providers during the planning phase.

Construction financing: Interest

Construction financing is characterised by long terms. If the interest rate is only a few percentage points after the decimal point more favourable, this can result in a four-digit saving for the entire term. The monthly instalments are lower and the interest payments are not as high. The offers from the area of subsidised loans should also be compared before concluding the contracts. A building savings contract that is ready for allocation can reduce the monthly instalments, as can equity capital or the provision of personal contributions. Ultimately, it is important that the construction financing is set up so that it can be borne over the entire term. In addition to comparing the various offers, advice is very important.

Read also:

  • DSL Price
  • Natural gas price
  • Fixed Deposit
  • Investment
  • Current account
  • Heating oil price
  • Credit cards
  • Electricity price
  • Call money

Incidental costs for building and moving into your own house

The financing is not completed with the purchase price for the property. You have to reckon with further costs. When buying a house, you will have to pay fees for the notary and for the estate agent. As a builder, you will pay insurance and you should expect to pay the first instalments for the new house and the rent in parallel. Before moving in, you may need to buy heating oil. Depending on the size of the tanks and the current market price, this can run into four figures. Also factor the cost of moving into the financing. This is especially true if you are moving to another city and cannot organize the move yourself.

Financing can also include components that are not directly related to the construction of the house. It is advantageous if you bring equity and can liquidate a cash investment or deposit to reduce the cost of the loan. Comparing the offers on the market will bring you an additional saving on the cost of your construction financing.

More information on home building and financing:

DSL Price

An Internet connection is now standard in every household. More than 95% of all households have concluded a contract for the use of the Internet. The charges are part of the fixed costs of running the household. The internet has entered many areas of life and has become indispensable for many people. As a property owner, you are responsible for getting a connection to your home.

The standard for Internet use in Germany is the DSL connection. The expansion of the high-speed network has not yet been completed. Nevertheless, DSL is also available in remote regions of Germany. However, the speed at which you can surf is lower than in metropolitan areas or large cities. Since DSL is now part of the infrastructure, you should already take this into account when choosing a building plot. You can influence the laying of the lines in your house, but not the expansion of the DSL network. If the network is slow, it may take a few years before you can surf at high-speed. Take this into account when you decide to buy a property or build a house.

  • More information about the DSL price.

Natural gas price

The price of natural gas is set by the energy supplier. For decades there was a monopoly of the regional suppliers, so that you as a customer had no possibility to influence the natural gas price. This has now changed. The monopoly has fallen, and you can have a say in the price by making comparisons and choosing a cheap supplier in your area. There are utilities that offer their services nationwide. Others operate exclusively on a regional basis.

If you want to know which natural gas price is the cheapest at your address, carry out a comparison. You can call up the comparison calculator on the Internet and use it free of charge. After entering your address, your household size and your annual average consumption, you will be shown all the relevant suppliers. The cheapest offer will be at the top. However, don’t just compare the prices, but also the conditions and additional terms. It is advisable not to commit yourself to one supplier for too long. Opt for a short term if you want to be able to react flexibly to price adjustments. This applies to both price increases and decreases.

  • All information about the price of natural gas.

Fixed Deposit

The term fixed-term deposit refers to an investment that is tied to a specific term. You agree this term with your bank in advance. Periods of between twelve months and six years are common. The term is the most important distinguishing feature between fixed-term deposits and overnight money. While you can dispose of the credit balance in an overnight deposit account at any time, the money in the time deposit account is not available.

If you want to receive the agreed interest, it is necessary that you do not touch the deposit during the entire term. If you urgently need the money, you can terminate the time deposit account. The deadlines for such a termination are one to three months. Therefore, transfer money to the fixed deposit account only if you are sure that you will not need it during the entire term.

  • Learn all about the fixed deposit.


A cash investment is taken out when there is an amount left over after all monthly expenses have been deducted. You can transfer a one-off amount into a cash investment, or you can opt for regular monthly payments. Banks and savings banks offer various forms of cash investment. These differ primarily in their availability. The aim is to earn interest on the money. In addition to traditional savings accounts, you can also opt for securities as an investment. The interest rates are higher. The disadvantage, however, is that you cannot count on the money as well.

You do not know in advance how interest rates will develop, because they depend on prices on the capital markets. The classic investment of money in the form of a savings account, a call money or a time deposit account, on the other hand, can be precisely predicted. However, the interest rate can be significantly lower than if you invest in shares or securities.

  • More information about the investment.

Current account

A current account is used to handle your daily financial transactions. You use it as a salary account, for purchases and for all transfers and debits that become necessary in everyday life. Current accounts are offered by all banks and savings banks. Before opening a current account, it is strongly recommended to compare the conditions. The offers differ greatly in their price-performance ratio. There are current accounts where account management is completely free. However, with many banks you pay fees. Before opening, you should find out for yourself which services of the bank you need and what you can possibly do without. In many cases, a free checking account is sufficient. Sometimes, however, you are limited in the options for obtaining cash.

Online banks offer favourable conditions. However, they do not have their own network of ATMs and you have to do without personal advice. Not all of the cheap online banks issue a Girocard. You get a credit card and a Maestro card. The use is free of charge. Since especially smaller shops in Germany only accept Girocards, you will have to resort to cash. Therefore, analyse your payment behaviour in advance before you open a current account at a bank or savings bank.

  • Everything about the current account.

Heating oil price

Heating oil is an alternative to natural gas. It burns environmentally friendly, but does not belong to the renewable energies. Modern heating stoves that use heating oil as a fuel are convincing with their low consumption and are considered energy-efficient. Many building owners choose heating oil because they are independent of an energy supplier. The heating oil is stored in tanks. The size of the tank can be freely chosen during installation. It is possible to connect several tanks together to be able to use a larger supply of heating oil. As a prerequisite for the installation of an oil heating system is that there is enough space for the tanks. You choose the size of the tanks when you install them. Theoretically, it is possible to expand the tanks afterwards. However, this will cause additional costs. For this reason, a new heating system should be well planned in advance.

Credit cards

Credit cards are considered a very popular means of payment on the market. Originally they come from the USA. They are widely used there and in many other countries around the world. In Germany, the acceptance of credit cards has increased significantly in recent years. The reason for this is that the fees for their use have been lowered by the operators. In other countries, however, acceptance is even higher. In this country, smaller shops in particular do not accept credit cards. The same applies to snack bars, market stalls and small restaurants. Especially in structurally weak regions and in the countryside, the credit card is largely excluded as a means of payment in Germany. And while in other European countries you can even pay for your coffee or ice cream at the beach with your card, in this country you are dependent on cash.

Nevertheless, the credit card is also a popular means of payment among Germans. The desire to travel remains high in Germany and the credit card is often used abroad to pay for purchases and bills, but also to obtain cash. There are different types of credit cards, which differ in their billing and in the possibilities of use.

  • Learn all about the credit card.

Electricity price

The price of electricity is subject to very strong fluctuations. For many decades, there was an energy monopoly of individual regional suppliers. Customers had to conclude their contract with the supplier that was located in their town. There was no choice. Since the monopoly was opened up, you have a choice of many different suppliers. Some are still regionally based. Others offer nationwide contracts. The price of electricity has not become cheaper as a result of the opening of the market and the greater competition it has brought. In fact, the opposite is true. Electricity prices have risen continuously in recent years.

You benefit from the switching option because you can look for another electricity provider. However, you often have to be prepared to switch suppliers on a regular basis. The reason for this is that many electricity providers calculate particularly favourable prices for new customers. In addition, there are bonuses that apply only to new customers. These additionally reduce the price. If you can no longer take advantage of these bonuses after the end of the first contract period, it will be significantly more expensive for you. However, since you can always cancel your contract after a price increase, you will have a new switching option.

  • Everything about the electricity price.

Call money

The term already describes the fact that call money is a short-term investment. In this respect, call money differs from time deposits or savings bonds, which are tied to a term. These investments can only be terminated at a loss and subject to a period of notice. With call money, you can have the deposit transferred to the linked account on a daily basis. For this reason, call money accounts are very suitable for construction financing. There are no fluctuations and no currency risks. You know in advance how much money is in your call money account and can plan accordingly. This is very important for a construction financing, because you have to pay the open amount on the due date.

However, there is also a disadvantage, and that is the low interest rate. Because call money is available at such short notice, many banks concede interest rates that are only marginally higher than the European Central Bank’s base rate. Nevertheless, the call money for a construction financing is often the only alternative if you need the deposit in the short term.

  • More information on call money.