Due to a combination of attractive housing prices and favourable lending terms, Germany is a darling among foreign investors who wish to buy property using mortgage loans.

Foreign mortgage loan terms in Germany (November 2016)Source: Tranio

Maximum LTV ratio 60%
Minimum loan amount €50,000
Fixed rates 1.5-2% per annum
Loan term 5-30 years
Minimum age of borrower 18
Maximum age of borrower
by the end of the loan term
75
Maximum percentage of monthly
income for mortgage
35%

Documents

Basic documents required to obtain a mortgage loan in Germany include:

  • passport copy
  • filled in “Selbstauskunft” questionnaire
  • real estate documents containing basic property information and photos. Banks are more willing to provide loans in the event that the property has been or will be rented out. In such cases the bank requires a rental agreement
  • extract from the Land Register (issued no less than six weeks in advance)
  • certificate of employment and latest tax return. If the purchased property has been leased out, 75% of the rental fee minus utility fees (Kaltmiete) is added to the income amount
  • information about monthly expenses (other loans, rentals, utility payments, alimony, etc.)
  • confirmation of equity available.

Legal entities wishing to obtain a mortgage must also submit balance sheets for the two previous years, their latest tax return and a business evaluation known as a Betriebswirtschaftliche Auswertung.

All documents must be translated into German and notarised.

Loan applications usually take 4-6 weeks to process.

Extra costs

Non-recurring mortgage costs typically comprise about 1% of the total loan amount. Property insurance costs usually amount to about €150 per year.

Additional mortgage costs in Germany (November 2016)Source: Tranio

Property appraisal and due diligence €300-600 (usually
free for property valued
under €500,000)
Property insurance About €150 per annum
Borrower's life insurance (optional) €200-500 per annum
Mortgage arrangement fee 1% of the loan amount
Early repayment penalty
(not applicable to floating rates)
0.5% of the remaining debt
 
 
Free advice on real estate in Germany
Ekaterina Sajitharan
Real Estate Expert Tranio in Germany
+44 20 3608 1267
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