Seeking Construction Funding in Dortmund

Seeking Construction Funding in Dortmund

Booming Real Estate Market in Dortmund: A Comprehensive Guide to Construction Financing

Dortmund, a bustling city in Germany, is currently experiencing a boom in its real estate market. With low building interest rates for years and a surge in 2022 and 2023, it's an exciting time for those looking to invest in property. However, the high demand and limited supply make finding suitable properties challenging.

Construction Costs and Property Values

The average cost of constructing properties in Dortmund is around €460,000. The price of plots of land is approximately €540 per square meter. The value of a property can vary, with the example given being €350,000.

Location of Single and Two-Family Homes

Single and two-family homes are not typically found in the city center, where densification is taking place. Instead, the north and east of the city offer opportunities for these properties. The south tends to have more expensive objects.

The Role of Insurance Companies and Banks

Insurance companies AXA and ERGO, as well as nationwide banks such as ING, Commerzbank, and Postbank, offer construction financing in Dortmund. Local banks like Sparkasse Dortmund, Dortmunder Volksbank, PSD Bank Rhein-Ruhr, Volksbank Rhein-Ruhr, and Volksbank Ruhr Mitte also provide real estate loans with personalized financing options.

Independent brokers like Stempel Finanz offer access to tailored mortgage solutions from about 470 banks across Germany, including those in Dortmund. Platforms like Interhyp and Dr. Klein compare a variety of construction financing options in Dortmund, working with local credit institutions as well.

Representative Examples of Construction Loans

Here are three representative examples of construction loans in Dortmund:

1. Effective annual interest rate: 3.85%, fixed interest rate per annum: 3.75%, initial repayment rate per annum: 2.00%, loan-to-value ratio: 57.00%, property value: €350,000.00, net loan amount: €200,000.00, interest costs: €63,641.25, monthly installment: €953.33, remaining debt: €149,993.75, total term: 28 years and 8 months, number of installments: 344, total amount: €324,514.00.
2. Effective annual interest rate: 3.38%, fixed interest rate per annum: 3.30%, initial repayment rate per annum: 2.00%, loan-to-value ratio: 57.00%, property value: €350,000.00, net loan amount: €200,000.00, interest costs: €60,088.22, monthly installment: €896.67, remaining debt: €152,487.82, total term: 29 years and 4 months, number of installments: 352, total amount: €315,456.78.
3. Effective annual interest rate: 3.43%, fixed interest rate per annum: 3.35%, initial repayment rate per annum: 2.00%, loan-to-value ratio: 57.00%, property value: €350,000.00, net loan amount: €200,000.00, interest costs: €60,963.98, monthly installment: €905.00, remaining debt: €152,363.98, total term: 29 years and 2 months, number of installments: 350, total amount: €316,687.69.

Additional Costs

When buying a house in Dortmund, it's important to budget for additional costs, which can amount to 15 to 20% of the house construction costs.

Navigating the Market

With the booming real estate market in Dortmund, it's essential to carefully consider all factors, including location, construction costs, property value, and financing options. Utilising the services of brokers and banks can help navigate this exciting yet complex market.

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