The Beginner’s Mortgage Guide to Buying Property in Germany

Mortgage Tips

Are you considering getting on the property ladder in the land of Wurst and Bier? I have collected some information about German mortgage tointroduce you to the basics.

Buying property in Germany is worth considering as an investment given the steep rise in prices. Despite “the current situation”, i.e. the pandemic, housing prices in Germany have risen an astounding 67% since 2014. Despite the very low current interest rates for buying property, Germans have historically low home-ownership rates; merely a little over half of Germans live in property they own. Even with a hot market and low interest rates, buying property is challenging for several reasons (even if you are a native speaker of German legalese). But fear not, it is less complicated than it may seem. First, the good news is that Non-German citizens are allowed to buy property in Germany, independent of their immigration status (not a given in other EU countries). I offer you a little guide to get you started on your way to buying your own home, be it to live in, or as an investment. In this guide, we will cover:
  1. How much you need to have saved upfront.
  2. Figuring out what you can afford in monthly instalments, including closing costs.
  3. Where to look for your dream property.
  4. The basics of what you need to know before you start your search.
  5. Understanding property taxes due when you buy.

How much money do I need to have saved for a down payment in Germany?

A down payment for buying would usually start around to 20% which covers all the initial fees. If you can’t come up with this amount, fret not. Sometimes it is possible to finance 100% of the property price. Bear in mind that many lenders in Germany consider foreign investment a higher risk, so will require higher deposits of up to 50%. The amount you pay upfront will influence your monthly instalments or payments, as well as the final value.

What can I afford?

Using a mortgage calculator to get a feeling for what size of mortgage you can take on. You might be eligible for one or more funding programs offered by the government that can help you out financially (e.g. KfW). You will need a German bank account. Before you start looking at properties, check out how much you can afford. This will save you the disappointment of looking beyond your means, and more importantly, aiming for the right maximum property value increases your chances of getting your loan approved, avoiding going through the whole process in vain. You should keep so called “Closing costs” your property deal in mind. Property transfer tax: Varies between 3.5% to 6%, depending on the property location Notary fees/land registry fees: Around 1.5% of the final property price Real estate agent fees: Expect fees from 4.76% to 7.14% of the property price, also depending on several factors including location. In sum, purchase fees are between 5-15% of the property price and are covered by the buyer and will not be included in your bank loan.

How can I find the ideal property to buy in Germany?

As the old real-estate adage goes: “location, location, location” is pretty important when narrowing down your search for your ideal property. The highest prices per sq meter are to be found in the big cities (Berlin, Cologne, Düsseldorf, Frankfurt, Hamburg, Munich). But if you haven’t settled for a specific city yet, it pays to look beyond the obvious choices and browse through one of many up-and-coming German cities to invest like Leipzig or Chemnitz. Also, the less obvious but still beautiful and very liveable smaller cities top the actual return on invest list! Finding real-estate listings is very easy nowadays. You can check out popular websites like,,, or if you are looking for agent-fee-free listings only and Don’t forget offline sources like actual real estate agents, newspapers, magazines, and foreclosures. In any case, if you are looking in an area where things are not moving fast, take time to survey the market and find your dream property. In areas where things are not moving fast, expect to be on the hunt for more than a couple of months. Once you find something you like, though, you must move fast!

What are the basic steps you can expect in the process?

You know how much you want to invest, you’ve found your ideal house. It’s important to move fast to get the best mortgage. A mortgage pre-approval can be a life saver. A pre-approval certificate takes only a few minutes, and it shows real estate agencies that you are a serious and have the money to back up your intention of buying! In competitive markets where there are more buyers than sellers (e.g. Berlin or Munich) a mortgage pre-approval can make all the difference. Each bank and lender has oftentimes daily changing interest rates, closing costs, monthly installments, and more… While some of these differences might be small in percentage points, they can be big in actual euros, so it pays to look for the best option. Making a good choice with regards to your financing options is easy with a certified mortgage broker on your side. In fact, it is required by law to have a mortgage broker that can help you can navigate confusing rates. Having your paperwork sorted out in advance will make things go smoothly. I recommend having copy of your ID, the last 3 salary slips, property exposé, etc. at the ready. Depending not the lender, mortgage approval rates can take from 2 to 15 days. In competitive markets, you’ll want to be fast so you can find the perfect financing solution as soon as possible. When your mortgage application gets approved, you’ll need to schedule a notary appointment within 1 to 4 weeks and sign the contract before the offer of the bank or lender expires. Congrats! You’ll be the proud owner of a property in Germany!

What tax situation can I expect once I buy property?

There are some differences tax-wise buying a house or apartment to let vs to live. If you live in the house you buy, that is, in owner-occupied property your mortgage interest is not tax-deductible. Whereas that is not the case for a house you live in. On top of your rental income tax, there’s also a 5.5% solidarity surcharge. Certain maintenance costs, improvements and repairs to your properties is tax-deductible to a certain extent. If you ever sell your property, there is another detail you should know: Selling your property within 10 years of purchase is taxed (Spekulationssteuer). Selling after 10 years, however, is not. Recap: Buying a home in Germany
  1. Find out how much you can afford with my mortgage calculator
  2. Prepare your mortgage documents in advance
  3. Get a mortgage pre-approval
  4. Find your ideal property
  5. Get in touch with a mortgage broker
  6. Make an offer, and reserve if possible
  7. Book your notary appointment to sign the contract and pay the closing cost
A mortgage broker can help you find the best financing solution. To wrap up, buying your dream home in Germany can seem daunting at first, but once you get acquainted with the basics, it is a sound investment! There is a lot you can do to make this process smooth: Shopping within your budget, preparing your documents beforehand and getting pre-approved can minimize hurdles and increase the likelihood of you closing successfully on your dream property. If you have found your dream property already get in touch with a certified mortgage broker for Germany as soon as possible. Like here. Feel free to get in touch via – I am happy to help!
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