A report by the independent real estate financier PLA Financing from the consulting practice shows how you can clear up stumbling blocks in the settlement, which can cost you dearly.
The customer is happy – after a thorough comparison of the market is the ideal financing concept for the dream property : Top conditions are secured, cheap public funds are involved, long-term interest rate hedge and flexible repayment options meet the personal wishes. So far so good. Only in the implementation of stumbling blocks can appear, to which the buyer has not thought, or are not aware of him.
Please read and understand the contract briefly
Read the draft contract carefully and in case of doubt ask the notary for further explanation,But the notary is an independent trustee of both parties and not only has to protect your interests. In our consulting practice we see again and again draft contracts, where the implementation is problematic to impossible. A current example was an apartment that had to be converted from a part ownership to a residential property. This requires the consent of all other parties and mortgagee creditors of the community of owners. This can take a long time and one can also say “no”.
Anything that precedes the rank of collateral can lead to a problem. This can be, for example, pre-emption rights of third parties. The contract of sale becomes effective only if the right of first refusal is not exercised. Especially when converting into condominiums you should wait in any case, the right of first refusal of the tenant §577 BGBG, otherwise it can be expensive.
Power of attorney for financing
If the land charges still to be extinguished for a no-burden land register are higher than the purchase price, it should in any case be clarified beforehand how high the remaining debts actually are. For a financing you need a power of attorney in the purchase contract with sufficient security agreement, if modernization or construction costs must be covered. The conditions for the due date of the purchase price payment should be checked carefully. Only if they are fulfilled, the purchase can be completed.
It often happens that not all the necessary information and documents on the financing object are available for financing advice. This can lead to problems with the implementation. Especially in times of sharply rising purchase prices, the issue of mortgage lending by banks is a topic with a major impact on interest rates. If the bank does not meet the value stated in the application, there will be an interest charge or even a denial of financing. The enclosed space is an important value with which the banks make a plausibility calculation at the purchase price. Have the seller hand over all relevant documents, including a modernization plan.
We also experience surprises again and again when suddenly the fitted kitchen or other furniture appears in the purchase contract to reduce the real estate transfer tax. However, this does not consider that the mortgage lending value of the property is lowered in the same way and interest rates can increase. Banks basically want to have demonstrated the value of modernization through invoice presentation. Pure value-preserving renovation, such as painting is not worth increasing as well as cash on hand payments for access workers. This simply remains moonlighting and can not be financed.
Our tip: Look for the interview with the independent financing expert you trust early, so that the implementation works smoothly and without surprises.