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Financing Real Estate in Germany

The German real estate market is currently experiencing a high level of demand.
In many places it is hard to find properties for sale.

In this article, the focus is not only on the credit on real estate itself but also on its granting institutions, the so-called real estate credit institutions. This group of specialised commercial banks has an important position in Germany’s extensive system of banking institutions.


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In Germany it is possible for German citizens and EU citizens with a residence permit to get mortgage financing up to 100 times their net income. For Blue Card holders it is a bit more difficult.

There are also many real estate funds that invest in German real estate. Closed funds are usually structured as asset-managing limited partnerships under civil law. Their investors are taxed according to the general provisions on partnership taxes. Open funds are normally taxed according to the taxable capital gains act (lnvStG).

Individuals and corporations that own real estate in Germany are subject to property, trade and value added tax. In addition, the partners in commercial partnerships are assessed to trade and value added tax. Real estate is also subject to real estate transfer tax. For foreigners it is important to have a Real Estate broker that can provide advice and help with the tax implications of buying property in Germany.


Germany is a relatively safe and developed country, offering a good quality of life and affordable housing. As a result, many foreigners decide to settle in the country.
In order to buy a property in Germany, it is necessary to meet certain requirements and to submit a number of documents. For example, the banks require a self-disclosure form that includes not only personal data but also income and asset information. In addition, a deposit of 20-30% of the property value is required.
Generally, a mortgage is granted up to 100 times your net monthly income (LTV). However, this depends on your residence status. Blue Card holders can get a higher LTI limit than those with a work permit.
If you are a freelancer or self-employed, it is important to present a few years of tax assessment and income statements, as well as current account statements. It is also worth noting that the German people are known for usually not owning their own homes or using credit cards, which makes them a more conservative group when it comes to lending money.


While the German real estate market is a popular investment option for overseas buyers, it is important to understand the local laws and regulations before making a purchase. Generally, you will need to have at least a 20% down payment in order to get a mortgage. The first step is to get an informal agreement in principle (pre-approval) from a bank. This will indicate how much you can borrow and will show sellers that you are serious about buying their property.
Once you have found a property that you are interested in, you will need to pay a reservation fee. This can range from 0.5% to 1% of the property’s price. This will guarantee you priority if the seller receives several offers for the property. It is also a good idea to have the property surveyed by a surveyor before paying the reservation fee.
Aside from the reservation fee, you will need to pay property transfer tax, which varies depending on the state. This is usually around 3.5%-6.5% of the property’s purchase price.


For many Germans’ owning their own property is a dream. Even though the percentage of people owning their own home has been falling in recent years, it still remains high in comparison to other countries.
The reason for this is that interest rates on mortgages are very low in Germany and full financing, including purchase costs, can be obtained under certain circumstances. However, this is a huge commitment, and it is therefore important to secure your financing before purchasing.
A good and competent mortgage broker will support you through the entire process. They will show you all your options and help you understand what fits best for your personal situation. Generally, it is a good idea to save enough money to cover at least 5% of the purchase costs. This way you can redeem the upfront costs within a short time frame and pay off the debts in the following years. This will increase your chance of obtaining a mortgage.



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