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What You Need to Know About Getting a Mortgage in Germany

August 17, 2022
Investing in real estate in Germany can get pretty expensive. A studio apartment will already cost you tens or hundreds of Euros. And a full-blown house? Expect it to cost around a couple of millions of bucks! That's right, buying a property in Germany is expensive. So it's a good thing something like a mortgage exists! With this financial scheme, you can fund your home here while you enjoy it. Of course, to get this loan, you'll need to apply first. And before you do that, you ought to know a little about how to get a mortgage in Germany.

What You Need to Know About Getting a Mortgage in Germany

What are The Costs of Getting A Mortgage?

When you apply for a mortgage in Germany—or anywhere else in the world, for that matter!—you will face a few important costs. They include a mortgage application fee, which is around 1% to 2% of the total loan amount, notary fees, registration fees, and real estate agent fees (if you hired one). Moreover, if the property in Germany is worth more than €500,000.00, you need to conduct a property assessment. That will cost you €300.00 to €600.00. But do take note that paying these costs won't mean your application for a mortgage loan will be automatically approved.

What are The Requirements?

As with any other application process, applying for a mortgage in Germany requires a few important documents. They include proof of identity, proof of income, your latest tax returns, proof of available equity, and extracts from the Land Registry from the previous six weeks. And if the property in Germany was once leased, you need to provide documentation of rental income. Also, in some cases, you might be required to show your residence permit. All in all, these documents have to be in German before you submit them. That's where your notary can help!

What You Need to Know About Getting a Mortgage in Germany

What are The Different Types of German Mortgage?

Here in Germany, there are four types of mortgages you can apply for. The first one is the fixed-interest loan, the most stable of them all. This is the most popular among homeowners and is highly recommended. Secondly, there's the interest-only loan, wherein only the interest is paid throughout the duration of the mortgage. Only when the term is completed will you have to pay the principal. Thirdly, there's the building society loan, a combination of fixed-interest and interest-only loans. And fourth, there's the variable rate loan, a type of mortgage that relies on the rise and fall of mortgage rates in Germany.

How Much Can You Borrow?

On the subject of how much you can borrow for your mortgage loan, this will depend on various factors. Namely, your residency status. Although there are no laws that prohibit foreigners from purchasing real estate in Germany, it's a different story when getting a mortgage here. As already mentioned, mortgage lenders requiring you to show a residency permit is quite common. And if you're a resident of Germany, you can borrow up to 80% of the property value. But if you're not, the amount you can borrow is limited to 55% to 60%.

What You Need to Know About Getting a Mortgage in Germany

Since real estate in Germany is pretty expensive, how will you ever be able to pay for it? By getting a mortgage here, of course! Learn more about it before you apply. Even just knowing the basics will help you more than you realize!

#mortgage   #real-estate-tips   #buying-property   



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