Muscle mortgage
Muscle mortgage is the slang term for the builder's own work in connection with the construction or acquisition of a property , which can consist of material and labor , especially the value of building materials brought in and self-help .
Motifs
In the context of private real estate financing , personal contribution is understood to mean any work performed by a borrower himself or through his construction workers on the financed structure. According to Section 15 (1) II. II. BV , personal contributions also include the value of your own building site and the value of the building parts used .
Since this work and services in kind are not provided by construction companies, the own contribution reduces the construction costs and therefore increases the equity ratio . A higher share of equity - also through own work - lowers the bank loans and thus also the debt service ; Business indicators such as debt service capacity , debt service limit and debt service coverage ratio improve in favor of the borrower. With a larger share of personal contribution and equity in the financing plan, there is a greater likelihood of a positive decision in lending and, above all, subsidies .
The aim of the muscle mortgage is to reduce labor costs for tradespeople through personal work (self, relatives, neighborhood or organized group self- help ).
proof
The own contribution must be plausibly proven to the financing credit institutions in the financing plan, because the equity participation of the borrower plays an important role in construction financing for banks (see full financing ). In individual cases, up to 30% of the construction costs can be covered by your own contribution.
Risks
The importance of the muscle mortgage is often overestimated. Risks lie in the high expenditure of time, the longer construction period , the in some cases inadequate technical qualifications and the exclusion of warranty claims . In terms of structural engineering, the personal contribution can therefore mean a risk for the client if construction defects later become apparent, which may have been caused by complicity of the self-employed, unskilled builder.
Individual evidence
- ↑ Elke Schulze / Anette Stein, Baufinanzierung , 2013, p. 37
- ↑ Elke Schulze / Anette Stein, Baufinanzierung , 2013, p. 38