buy a property in Germany as an expat.

Independent mortgage broker in Germany

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First things first

Mortgage application with German banks can be a rather time-consuming and frustrating process with tons of paperwork involved.

We can help you to find the right mortgage and process your application so that you have to suffer only a minimum of fuss with German banks.

Mortgage brokers are not paid until they have successfully brokered a loan for you. They then receive a commission payment from the banks.

As a mortgage broker, we have the entire market in view and compare the offers of more than 400 banks for our customers, who are located throughout the Federal Republic.

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Mortage

Patrick Ott
Patrick Oliver Ott
Expert for insurance and finance
9. March 2022
mortgage for house or apartment

Find the best mortgage for your property in Germany with an independent broker

Do you want to buy some real estate in Germany to live in or simply as investment to rent out? Regardless if you are a resident in Germany or rather want to purchase the real estate while living abroad as a foreign real estate investor: we can help you to find the right mortgage and process your application so that you have to suffer only a minimum of fuss with German banks.

Why use a mortgage advisor?

Because a lot of money is at stake in real estate financing, comparing banks, interest rates and the like is so important. It is true that low interest rates have been promising fundamentally favorable conditions for years. However, there are still enormous price differences between the individual lenders, banks, savings banks and insurance companies, which are often not recognizable at first glance.

Above all, if laymen concerned themselves with the complex topic of the construction financing. Financing intermediaries do not only take over the comparison for their customers. They also advise them transparently and select the best loan from a broad portfolio of cooperating banks in a joint discussion.

Special advantages of mortgage brokers for Expats

Mortgage application with German banks can be a rather time-consuming and frustrating process with tons of paperwork involved.

To this regards we are often acting more as a “cultural translator” than as an advisor initially. For Expats and foreign investors it is sometimes a nasty surprise to find out that banks in Germany are very conservative, to say the least, in lending money for real estate. A foreign investor, i.e. someone who has not his residence in Germany, who just wants to purchase an apartment or a couple of them as a good investment, will have to understand that the best he can expect is a LTV (loan to value ratio) of around 50-60% tops.

The reason for these LTV being that German banks do not expect the value of a property to rise sharply in short periods of time on one hand and thus look at the worst case – foreclosure – on the other hand just based on the property value. Since foreclosure often leads to auctioning of the property where in the second round of auctions even bids of 50% and less have to be accepted, banks are keeping the LTV low accordingly because they do not trust that they can lay their hands on foreign property or income if meant as a collateral.

For German residents it is a somewhat better: if you have been a resident for while in Germany so that you have some (local) proof of income in the form of a tax note, you can get – depending on your source of income, i.e. whether you are self-employed or an employee or even a public servant – much higher LTVs. Especially employees in an unlimited contract and public servants can even expect 100% of the property value, assuming of course that their own income or rental income can sustain the dues for the mortgage properly.

Self-employed persons should usually expect to put up a down payment of around 20-30% most often, unless you have a good and longer standing with your bank.
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Selecting the best banks for you

Equity plays a decisive role in the selection of banks for financing offers. The number of eligible institutions changes depending on the amount of the bank's own cash reserves. There are banks where so-called full financing is possible without any problems, i.e. where buyers acquire the property entirely by credit.

Nevertheless, there are some, with which financings are possible only by an accordingly high portion of own equity. Finding out the whole thing on your own costs not only time but also energy. The prospective property owners or house builders would certainly prefer to put this into planning or renovation.

As a mortgage broker, we have the entire market in view and compare the offers of more than 400 banks for our customers, who are located throughout the Federal Republic. Thus, we are able to find the optimal solution for everyone. Of course, also with KFW loans integration, state-subsidized funding programs for ecological construction, for example.

What are the advantages of our credit check for you?

In a first step we shall analyze your eligibility for a mortgage in Germany by sending you a questionnaire for the most relevant data that German banks will need to offer you a mortgage. Customers of mortgage brokers not only save time when comparing offers. The experts handle the loans for them and also support them after the papers have been signed.

But there is another point in favor of going to a mortgage broker. Very important for real estate financing is the Schufa score, the German main credit scoring databank which describes the creditworthiness of a person. Anyone who visits several credit institutions runs the risk that this score will deteriorate.

This is because, in case of doubt, any bank can make a Schufa inquiry, i.e. a credit score with the most important German database. In the worst case, many visits to banks will result in a correspondingly large number of inquiries ending up in the Schufa black box. Unfortunately, this results in a worsening of the score, and customers may receive lower interest rates from the bank, even though banks have been instructed for many years by the supervisory authority to only submit so-called condition inquiries (Konditionenanfrage), which have no influence on the SCHUFa score.

We therefore only become active when we receive the green light from our customers for a financing proposal that has already been explained in detail - this means that exactly one Schufa inquiry takes place.

How can you increase your chances on the real estate market with the help of financing intermediaries?

Many prospective buyers do not start looking for financing until they have already selected a specific property. However, it makes perfect sense to seek advice from us in advance. As part of our budget consultation, we determine the highest possible loan amount for our customers, taking into account their monthly income and equity.

This way, they already know at the beginning of their search what they can realistically afford. We can issue them a confirmation of this, which they can then use to prove directly to the seller or agent on paper at a viewing appointment that they can afford the house and basically only the green light for the respective loan is still missing. This is already a very, very good signal for the individual seller and a clear competitive advantage for prospective buyers.

Interest rates are on the rise again - the advantages of a forward loan

After years in which interest rates actually knew only one path, namely downward, we are slowly facing a trend reversal. There are increasing signs that the central banks in the U.S. and the EU cannot avoid slowly adopting higher interest rate levels again.

Securing today's interest rates for the future - that's possible with a forward loan This type of loan is particularly interesting for real estate owners whose fixed borrowing rate is about to expire and who need new financing to settle their remaining debt.
Anyone who bought a house in Germany around 10, 15 or even 20 years ago usually has to deal with the issue of financing again.

This is because most real estate owners have not yet completely paid off their loan amount after expiration of the debit interest rate lock agreed with the bank. In this case, a so-called residual debt remains. In order to repay this, a new loan is often required, a follow-up financing.

With a forward loan, our customers can secure the current low interest rates for this second loan. And they can do so up to a total of 60 months in advance. A forward loan is also of interest to those who want to terminate their current construction financing prematurely after ten years using the special right of termination under Section 489 of the German Federal Code. They can reschedule their financing in this way and thus also benefit from the low interest rate level.

The cost of a forward loan in Germany

Regardless of how early homeowners secure the low interest rates, the payment of the forward loan does not begin until their old fixed-interest period has expired. There are no costs such as commitment interest or even monthly installments for the respective lead time, also known as the forward period.

However, banks charge a premium for reserving the interest rate. And this is approximately between 0.02 and 0.03 percent per month. This means that the longer homeowners secure the interest rate, the more they pay for it. The forward loan is intended as a hedge against rising interest rates. It must therefore be calculated very precisely whether and what kind of forward loan can make sense for the individual customer.

What does a mortgage broker cost?

Now that you have learned about the many advantages the use of a mortgage broker can bring to you, the question coming up probably is: what do I have to pay for all this work?

Mortgage brokers are not paid until they have successfully brokered a loan for you. They then receive a commission payment from the banks. This makes the mortgage, as assumed by many, not more expensive than with the bank directly. It is often the case that the intermediaries can even offer more favorable mortgage rates than the respective financial institution itself.

This is due to the fact that the banks save enormously on personnel as well as office costs when a mortgage application ready for signature is submitted to them. And this in turn is reflected in the low interest rates.
So, now that you know all this – isn’t it time to contact us and let us handle your mortgage?

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