Construction financing is the largest loan that most people take out in their lives. Due to the amount alone, the lender makes high demands on the completeness and informative significance of the documents. In order to obtain the construction financing, you need a whole range of documents in addition to sufficient guarantees for the bank. Your earnings, any savings and values, information on the financing object and a neatly filled out loan application are important. Here you can learn how to speed up the approval process and prevent a lender's rejection if you have a good credit rating.
In addition to your ID card and a valid certificate of registration, the bank requires your most recent salary statements, your income tax statement for the previous year, and current pension information. A General Credit Protection Agency report personally signed by you, proof of other loans and leasing contracts, as well as documents on private health insurance (if any) will be requested by all lenders.
Fill out the application correctly and make sure that all documents for construction financing are complete at the time of application.
If documents are missing, this could be the reason for an evitable rejection. In the case of construction financing, the purpose of providing the documents is to check your creditworthiness and ability to pay, to weigh risks and, if approved, to set an interest rate. The fact is that a good financial starting position and the complete provision of all required documents for construction financing mean that your loan application is usually approved.
In construction and real estate financing, it is important that the loan amount corresponds to the value of your future property. For this reason, your bank advisor and future lender will ask for some information about the planned construction project and its costs. If you are buying an existing property, you will need to provide the land register extract, the preliminary purchase contract, at best a real estate appraisal and a copy of the existing building insurance. If you want to build a new house, the documents required for construction financing are more extensive. You will need floor plans, the development plan and a calculation of the gross floor area as well as the living space calculation. A pre-purchase agreement from the provider or construction company is needed for an estimation of the costs - and their comparison to the loan volume. Approval for the building project should be available, as well as shell insurance. In case the building plot is financed as well, you will also need all documents for the purchase of the plot. A preliminary contract is also sufficient for this, since you want to carry out the actual purchase via the construction financing.
As a self-employed person or freelancer, you are not excluded from a construction loan. But the access requirements are more complex and you need significantly more documents. To qualify for a construction loan, you must disclose a profit analysis and your balance sheets for the last three years in addition to the standard documents.
The business management evaluation from the tax advisor, the last three income tax assessments from the tax office and an excerpt from the trade or crafts register, if you are engaged in a trade, will be required. The period during which your financial security is checked is longer, in contrast to the credit application of an employee or a staff member. While for employees the last business and tax year is decisive, as a self-employed person you are required to complete the documents for construction financing with the documents of the last three years.
The completeness of your documentation is important for the construction financing. Do not submit anything later, but give all required documents immediately with the application. If you are financing part of the project and want to use your own capital in addition to the ancillary construction costs, or if you want to make personal contributions, you will need to provide further evidence in this regard. It is best to ask your potential lender what documents they require for construction financing and whether they can provide you with a checklist. Since the requirements in terms of documents differ between banks and lenders, it is not possible to make a blanket statement in this regard. But the fact is that only a complete application will be processed and will speak for your reliability. If you fail to include documents or make mistakes in the financing application, this circumstance could lead to a rejection without a more intensive examination of your request.
Every document regarding your financial situation, real estate and professional situation is equally important to the lender. Therefore, you should generally not forget any documents for the construction financing or assume that you can submit missing documents later. In addition to creditworthiness, your reliability plays an essential role and is an important indicator on the basis of which a lender makes its decision.
Due to the various requirements of individual banks and lenders, you should specifically ask which documents need to be submitted for the construction financing. Keep in mind that between this time and the presence appointment with the lender should be at best three to four weeks. Obtaining some of the documents for the construction financing can be time-consuming and may result in multiple requests and insistence on your documents. If you have a timely financing appointment with the bank, you may face the problem of not having all of your construction financing documents with you and not being able to submit the application in its entirety. To avoid this, give yourself room to maneuver.