A financing plan is the prerequisite for sound construction financing. This plan is drawn up on the basis of equity capital, total costs and credit requirements. In order for the construction financing to be as secure as possible, builders must calculate all figures realistically. In principle, a financing plan can also be drawn up yourself. Due to the complex financing offers and the many different aspects that need to be considered, the help of a financial advisor is recommended at the latest when looking for a financing option.

Checklist for your financing plan

•     Read up on the subject of construction financing and familiarise yourself with all the terms so that you can understand the financing plan.
•     Put together a budget with all your monthly income and expenses (living costs). It is best to use a budget calculator.
•     Estimate the total building costs realistically. The more accurate the planning the better. Plan a buffer.
•     Weigh up which sources of outside capital you can use, for example the bank, subsidy programmes or relatives.
•     Draw up the financing plan on the basis of your data and consult a financial advisor if you have any doubts or problems.

A financing plan ensures that builders can safely finance their building project. The financing plan is not a general scheme, but is individually tailored to each builder. In this way, repayment rates and interest conditions can be realistically estimated even before construction actually begins.
The three basic elements

The three basic elements of the financing plan are:

•     Total costs
      This includes production costs or acquisition costs, for example, also the ancillary construction costs.
•     Equity
      This includes both the available equity capital and own contributions to building projects.
•     Borrowed funds
      This item includes the required borrowed capital from third parties. The capital can come from banks as well as from funding institutions or relatives.

Since each of these elements can consist of many other individual items, an exact listing of all possible costs and available capital is important. Builders should be aware that long-term financing is planned for more than ten years. If the financing plan is not drawn up on the basis of realistic data, builders may face financial difficulties and, in the worst case, insolvency.

If borrowers discover payment gaps or possible bottlenecks when drawing up the financing plan, they should change their project. The plan can thus also help to avoid possible bad investments.

A financing plan is not a finance plan

The term "finance plan" is often used synonymously with the term "financing plan". However, they are two fundamentally different things. While the financing plan forms the basis for construction financing and is prepared voluntarily, the finance plan in https://exnesslatam.com/pt-br/ is usually part of an insolvency procedure. This plan is used to draw up the debtor's available financial resources. The finance plan also plays an important role in accounting. It enables companies to regularly check their liquidity. To create the plan, financial accountants pull together all of a company's payment transactions.