How to obtain a mortgage loan in Germany for foreigners?

The role of mortgage lending in Germany

In Germany, mortgage lending is an important component of the housing sector, significantly impacting the country's population. According to statistics provided by the analytical platform Statista, approximately 25% of families in Germany had mortgage loans as of 2019. This is quite a significant figure, especially considering that about half of the citizens prefer to rent rather than buy a home.

It is interesting to note that the number of homeowners continues to grow each year, which contributes to an increase in demand for mortgage loans. In recent years, mortgage rates in Germany have reached historic lows, making loans more accessible to the population. If an apartment purchased with a loan is rented out, the income generated can easily cover both the costs of maintaining the property and the regular mortgage payments.

Changes in interest rates and borrower requirements

The analysis of changes regarding mortgage interest rates in Germany from 2018 to 2021 shows that banks have tightened their control over loan applications. This is particularly noticeable for borrowers whose incomes cannot be properly verified. This category includes citizens who are not residents of Germany or the European Union.

Despite this, German banks are still willing to work with clients from Russia, Ukraine, and a number of other countries, among which the following can be highlighted:

• Deutsche Bank
• Raiffeisen Bank
• Volksbank
• Commerzbank
• Munich Bank
• Sparkasse

Mortgage for foreigners

As for mortgages for non-residents, it is important to clarify that there are no official restrictions on obtaining such a loan in Germany. The loan amount depends on the borrower's status:

• For German citizens, financing of up to 100% of the purchase price of real estate is possible.
• However, for non-residents applying for their first mortgage, the maximum loan amount is usually 50%.
• If the borrower already owns property in Germany or has previously paid off at least one mortgage in the country, their chances of obtaining a loan of 60-70% of the property's value significantly increase.

Conditions for obtaining a mortgage for Russians

Ekaterina Demidova, the CEO of DEM Group GmbH, claims that full coverage of real estate costs is available for German citizens. For Russians, on the other hand, there are conditions under which financing is possible with personal funds starting from 100,000 euros; the client will pay half of the cost, while the bank will provide the remaining part. Thus, the total budget must amount to at least 200,000 euros.

Criteria for borrowers

When applying for a mortgage loan, there are certain requirements for both clients and properties. The main requirement is the borrower's ability to demonstrate their financial reliability. This means having a stable job, a high income level, and legal sources of income. The borrower must confirm their financial capability, which is a key factor in the decision-making process for granting the loan.

Conclusion

In summary, it can be said that mortgage loans in Germany remain an important tool for those planning to purchase their own home, despite certain challenges that may arise for foreign citizens.

Key factors for obtaining a loan

Among the main factors to consider when applying for a loan, several key points stand out. First, the borrower must have an active bank account that has received funds for at least the last 12 months. Additionally, it is necessary to have funds available for a down payment.

It is also important that the borrower is between the ages of 21 and 65. They will need to provide documents confirming their income—individuals are asked to submit salary statements for the last six months, while self-employed individuals need to provide financial statements for the past two years. It is equally critical that their credit history is free of serious negative entries.

Special attention should be paid to the fact that the amount of loan payments should not exceed35%from the borrower's monthly income.

Loan conditions for Russians in Germany

According to Ekaterina Demidova, the CEO of DEM Group GmbH, Russians with permanent residency have the opportunity to obtain a loan for purchasing real estate in Germany, but three fundamental criteria must be met for this.

• The first of them— this is the obligation to provide a certification document from the bank that will confirm the presence of at least50%equity from the value of the acquired real estate.
• The second important requirement— this is a proof of income presentation. For an ideal borrower, the monthly salary should exceed2000 euros.
• Third requirementis based on the existence of a lease agreement for the acquired property.

It should be noted that for those who do not have an income in Germany and do not reside in its territory, the chances of obtaining a mortgage for personal residence are extremely limited.

How to calculate the possible loan amount

To find out the possible loan amount and corresponding regular payments, it is recommended to use special mortgage calculators available in Germany, such as the mortgage loan calculator from Loanlink and Hypofriend.

It is important to mention that German banks usually verify information about potential borrowers through a system.SchufaThis database includes information about the financial obligations of the country's residents, including existing loans, open accounts, contracts for communication and internet services, and more.

Accounting for income outside of Germany

Accounting for income earned outside of Germany can create difficulties for banks, and for this reason, such income is often disregarded. In some situations, lenders may reject a loan application, citing the inability to assess the borrower's financial situation.

It should also be noted that the bank will monitor the property that is under collateral until the loan is fully repaid. Lending institutions aim to protect their investments and therefore conduct thorough checks on the liquidity of the properties being considered.

Housing loans in major cities

In large cities in Germany, banks are eager to offer loans for purchasing real estate. Properties that are considered liquid include those that can be quickly rented out or sold profitably within a reasonable timeframe.

Criteria for mortgage application approval

The mortgage application is likely to be successfully processed if the property being purchased meets certain requirements. In particular, this could be a new house or apartment in a modern building, or a property located in an area that is attractive to financial institutions and intended for rental income.

By the way, secondary housing raises more skepticism among banks, especially when it comes to the condition of the property and its age. However, if there is an active rental agreement in place for such real estate, the likelihood of obtaining a loan significantly increases.

The mortgage market in Germany

For example, in the center of Hamburg, there are many banks that are willing to consider mortgage applications. However, if a bank determines that the property is a risky investment, there is a high likelihood of a loan denial.

Caution in financing

Over the past year, credit institutions have become more cautious about financing commercial real estate transactions. This is due to the risks that arose as a result of the coronavirus pandemic and the subsequent business restrictions, as noted by Ekaterina Demidova, CEO of DEM Group GmbH.

Required documents for application

In order to apply for a mortgage, the borrower must prepare a specific set of documents. If the borrower is a foreign citizen, they need to provide:

• foreign passport and internal passport with copies;
• a completed questionnaire with personal information;
• Proof of having capital amounting to at least 50% of the value of the purchased property in bank accounts (data must be provided for the last three months);
• Confirmation of stable income: for individuals, this can be certificates from the workplace, and for legal entities, it is financial statements.

Additional documents

The necessary documents include:

• copies of certificates of ownership for the existing real estate;
• Information on active loans in EU countries, the USA, or Switzerland;
• information about existing securities and bank deposits;
• bank account statements;
• documents for real estate, including an extract from the land cadastre, energy passport, and floor plan;
• If the property is being rented out, a copy of the rental agreement will also be required.
• For apartments in multi-apartment buildings, it is necessary to provide the minutes of the owners' meeting along with the calculation of utility payments.

Conclusion of an independent appraiser

The final assessment from an independent expert regarding the value of the property becomes another mandatory document. All provided documents must be translated into German and notarized. If the borrower is not a resident of Germany, it is highly advisable to provide a certificate of income from their country of residence; a standard certificate from their workplace, translated into German, will suffice.

Conditions for obtaining a mortgage loan

Among the standard conditions for obtaining a mortgage loan, one can highlight the minimum amount of personal funds, which is at least 40% of the property's value for non-residents. Currently, the average interest rate on mortgage loans in Germany is about 1.5%, making them accessible to a wide range of borrowers.

Conclusion

This information is relevant and important for anyone looking to purchase real estate in this country, as it allows them to adjust their capabilities and prepare for the mortgage application process. Considering all the gathered data and ongoing analysis of financial conditions, one can significantly increase the likelihood of successfully getting a mortgage application approved.

Mortgage lending for non-residents in Germany

For foreign clients interested in mortgage lending in Germany, interest rates range approximately from 2.39% to 4.60%. The maximum possible term of the loan agreement can be up to 35 years, but in most cases, the loan is issued for a period of 10 to 20 years. Borrowers have the right to repay the loan early; however, it is important to agree on this with the lender in advance, otherwise, there may be a need to pay a penalty.

Types of mortgage loans

In Germany, fixed-rate mortgage loans are particularly in demand. In this case, the client makes regular equal payments throughout the term of the agreement. Additionally, borrowers can take out loans with a floating interest rate, which are adjusted according to changes in the average EURIBOR interbank lending rate every three months, as well as based on the conditions offered by a specific bank. Currently, the EURIBOR rate is negative, which poses certain risks for borrowers — there is a possibility of interest rates increasing in the future.

Buying real estate abroad

It is also worth considering the possibilities for foreigners to purchase real estate abroad and the conditions under which this is possible. Germany offers a wide range of properties for sale. For example:

• Apartments in Dresden:For the sum of 171,300 euros, you can become the owner of an apartment with an area of 34 m², located in a five-story castle residence in Saxony. The residence, built in the 18th century, is undergoing restoration.
• Yield:The guaranteed yield for tenants is 5.48% from the first day after purchase.

Interesting objects

There are also other interesting offers, such as:

• House in Altenburg:A house for renovation priced at 99,000 euros, with a total area of 237 m², located on a plot of 250 m². Built around the year 1900.
• Land plot in Recklinghausen:A plot of 800 m² with an approved project and building permit, priced at 1,100,000 euros. The construction of a residential building for elderly citizens is planned here.
• Penthouse in Dresden:A luxurious two-level penthouse with an area of 345 m² for 4,200,000 euros, which is perfect for a large family. High-quality materials have been used in the interior.

Online property viewings

Online tours of real estate properties have been organized for buyers, making the purchasing process more convenient.

Furniture removal

If you're considering a plan for moving furniture, you have that option. Our apartment, where we spent two years, has been completely renovated and designed according to a unique design concept. The windows offer a stunning view of the city's famous glass structure.

Apartment in Passau

A private individual is selling an apartment for66,000 €in the picturesque city of Passau, located in Germany. The area of the apartment is37 square metersThis is a one-room option. An online viewing has been organized for interested buyers, and there is also an option for a remote transaction with payment in rubles.

This apartment is located in Bavaria, in the cozy village of Langfurt, and features a balcony that offers a magnificent panoramic view of the mountain slopes and vast forested areas.

Living conditions

The apartment is located on the second floor of the building and is currently available: the owner used it exclusively for leisure.In winterYou can ski wonderfully here, andin the summerto go on bike tours along scenic routes.

It's important to note that the air in this area is not only clean but also has healing properties!In the summerYou will definitely appreciate the absence of pollution and the freshness of the environment.

Luxury house in Munich

OrganizationDEM Group GmbHoffers a luxurious house for sale in Munich, priced at1,750,000 €The area of this townhouse reaches164 m²and it is located7 rooms.

To make it easier for clients, we offer an online viewing service and the option for a remote transaction, which significantly simplifies the process of purchasing real estate. The house has amenities, includingsaunaand beautiful garden plantings, which create truly comfortable living conditions.

Cozy corner

You've entered a cozy corner with a well-developed infrastructure, where you can enjoy all the delights of city life while being in harmony with nature. This exclusive property guarantees not only spacious living areas but also a unique atmosphere that is hard to describe.

House in Garmisch-Partenkirchen

There is also a house for sale in the famous Garmisch-Partenkirchen, priced at1,300,000 €Its area is260 m²and there is8 rooms.

If you are looking for a combination of authenticity and natural surroundings, this stylish house, nestled among the majestic Alps, will be an excellent choice. As soon as you enter, you will find yourself in a spacious hallway that leads to a luxurious hall, where the generosity of space is palpable.

Interesting offers in Düsseldorf

Another interesting option is a house in Düsseldorf from the company.Habita International Estates Ltd, put up for sale for1,500,000 €The area of this object is180 m², it provides for5 rooms.

The plot on which the house is located is5800 m²and includes3 garagesa large parking lot, as well as a secured area with automatic gates. This place is perfect for comfortable living. The property features a pond with carp and numerous fruit trees, creating an atmosphere of coziness and tranquility.

Apartments for sale

For those looking to buy an apartment, an option is offered for297,000 €total area76 m²and4 roomsCompanyHabita International Estates Ltdalso offers an apartment in Berlin for2,750,000 €, with an area of343 m²with12 rooms...as well as many other options for residential real estate, with prices starting from...199,300 €for an apartment with an area51 m².

All the properties are in excellent condition and ready for immediate occupancy. We recommend contacting the representatives for more detailed information about the properties you are interested in.

Investment opportunities from Habita International Estates Ltd

Habita International Estates Ltd presents an interesting plot of land measuring 800 m², located in the charming town of Recklinghausen in Germany, in the northern region of North Rhine-Westphalia. This offer is particularly attractive for investors, as the plot is fully connected to the necessary utility networks.

A specialized home for the elderly is planned to be built, which will include 19 apartments, each occupying a space of 55 m². The project also includes an underground parking lot and additional storage space, which will create comfortable conditions for future residents.

Proposal from EW Real Estate

EW Real Estate offers a rare opportunity to own a 4-star boutique hotel located in the heart of Frankfurt am Main, with a total area of 1850 m². This hotel has undergone a complete renovation and is equipped with modern climate control and water supply systems.

Inside, there are 55 impressive cozy rooms, making the property extremely attractive to those interested in the hospitality business. Its convenient location near the main train station ensures a high flow of clients, both tourists and business travelers.

Apartment in Berlin

There is also an apartment for sale in Berlin, measuring 78 m², with the option for online tours. This historic building underwent extensive renovations during 2023-2024 and is now equipped with a modern elevator.

• The apartment consists of two separate rooms.
• Availability of a sanitary unit;
• Balcony;

Located on the second floor, the residence offers a peaceful and secluded courtyard, perfect for relaxation and unwinding. All engineering systems are completely new, including plumbing and electrical equipment, ensuring a high level of comfort and convenience.

New apartments in Düsseldorf

In Düsseldorf, in the developing Meerbusch district, new apartments are being offered in a residential complex that will be completed and put into operation in 2025. The total area of each apartment is 77.72 m² and includes:

• two rooms;
• two bathrooms;
• balcony;

This accommodation, located on the second floor, is in close proximity to educational institutions and kindergartens, making it an ideal option for families with children.

Income property in Hagen

In addition, a rental property is for sale in Hagen. It has a total area of 690 m² and generates a stable annual income of 45,288 euros, which is equivalent to6.56%from investments.

The residential building, constructed in 1953 and extensively renovated in 1985 and 2014, includes 10 residential apartments and one additional living unit with individual garages. Its convenient location in the city center, close to transport hubs, makes the property particularly attractive to tenants.

Supermarket in Greifswald

Finally, a supermarket with a total area of 1160 m² is up for sale in Greifswald. This is an already operating business with a high likelihood of profitability, as the property is leased by a well-known commercial company.

The building occupies a plot of 5,477 m² and has enough parking spaces for clients. The lease agreement was signed for 10 years with the possibility of automatic renewal. The monthly income is2973.81 eurosincluding VAT, while all current operating expenses are paid by the tenant.

Shopping center in Dessau

In the German city of Dessau, a shopping center covering an impressive area of 3,789 m² is up for sale. It consists of two single-story stores connected by a covered walkway. Additionally, there is a physiotherapy center called Ullmann operating in a separate building.

In total, the area occupied by tenants is about 3748 m² and is divided among thirteen different tenants. The total land area on which this retail property is located is approximately 15...

Commercial real estate in Stuttgart

Stuttgart, the capital of the federal state of Baden-Württemberg and one of the main industrial centers in Germany, has commercial real estate valued at €6,500,000. The area of this property is 6,257 m², and the key tenant is the NP supermarket chain, which is part of the large Edeka group.

The lease agreement with this tenant will be valid until 2048, and there is no possibility of termination until 2038. The population of Stuttgart is approximately 600,000 people, which confirms its status as a significant cultural and economic center.

Additional expenses when purchasing real estate

It is important to understand that purchasing real estate includes not only the cost of the asset itself but also a number of additional expenses that must be taken into account.

• Property tax: ranges from 3.5% to 6.5% of the total value of the property.
• The fee for property re-registration is between 0.5% and 1% of the transaction amount.
• Notary services will cost between 1.5% and 3% of the property's value.
• The commission for the real estate agent ranges from 3% to 6% of the final price.

When entering new owner data into the land registry, a payment of 0.5% of the total asset value will be required, as well as avoiding a mortgage processing fee of about 1% of the amount.

Additional expenses for credit and insurance

The assessment of potential collateral can range in price from €1,000 to €2,000, while an audit of the asset, if required, will add another 0.5-1.5% to the total expenses.

As for insurance, the cost of insuring a life can range from €100 to €300 per year depending on health and age, while the expenses for insuring the property itself range from €100 to €500 per year depending on the chosen program and level of coverage.

Regular expenses and their impact on loans

For example, regular expenses for maintaining a bank account and obtaining various statements can reach up to €150. There are many factors that influence the likelihood of a positive decision from the bank regarding your loan application.

A professional who understands the requirements of financial institutions can significantly simplify the process of preparing the necessary documents. They will conduct a preliminary analysis of your document package and provide support in filling out the application form.

It is important to note that since 2020, the process of reviewing loan applications has noticeably slowed down due to the transition of some bank employees to remote work. Although today the overwhelming majority of restrictions have been lifted, not all employees have returned to their positions. Currently, the average processing time for a loan application ranges from one to two months.

Conclusion

The article about real estate loans in Germany highlights the importance of this tool for families seeking their own housing. As the data shows, a significant number of families have already taken advantage of mortgage loans, indicating a growing interest in real estate. One of the key reasons why interest rates are decreasing is that the real estate market is becoming increasingly relevant for investors, both local and foreign.

However, despite the availability of mortgage loans, I realized that the process of obtaining a loan is not as simple as it may seem at first glance. German banks make decisions strictly based on the client's financial data. This is an important factor that compels potential borrowers to prepare their documents with particular care. I strongly recommend paying attention to meeting requirements such as:

• absence of a bad credit history;
• income verification;

Since this significantly increases the chances of loan approval.

It's important not to forget that foreigners may encounter some difficulties. However, despite this, many banks in Germany are open to collaboration and strive to offer their clients optimal conditions, making real estate purchases more accessible. It's essential to consider all aspects before applying for a loan and to try to document your financial stability.

Buying real estate with the use of a loan in Germany is not only a step towards stability but also an opportunity to become part of a growing market that, despite some challenges, continues to attract the attention of potential investors. Considering the dynamics of interest rate changes and the increasing interest in home ownership, I am confident that mortgage loans will remain a relevant and sought-after tool in the German real estate market in the future.