How can you get a real estate loan in Germany?

It is not impossible to have your own home as an immigrant in Germany, but have you ever think about getting a loan?

Regarding the current European Central Bank (ECB) policy for zero interest rate, the borrowers can have a specific loan with low interest.

You have to meet special requirements to get a real estate loan in Germany. Don’t worry about that, these requirements are not so complicated.

In this article of Wise Business Group (WBG), we will explain the requirement for getting a real estate loan in Germany, in case you are an immigrant.

What are the requirements for getting a real estate loan in Germany?

People who are seeking to build or buy their own house in Germany often ask about certain requirements to get a real estate loan.

Here, we answer this question. requirements for a real estate loan in Germany are as follows:

Age

To be granted a loan in Germany, at first you should be of legal age, but your age should not be over 75.

Place of residence

You should have registered your residential address in Germany and also have a bank account in this country. 

Collateral

As financial security, you must illustrate that you have a regular (monthly) income.

For example, you can do this by representing a payroll with your application.

The point is you can prove that you have a permanent job and as a result, the bank assumes that you will be able to repay the installments regularly. As an employee, your employer can issue a payroll for you.

The bank checks your creditworthiness in this context, they may also ask Schufa about this. Such actions are taken to clarify that you paid your previous obligation, reliably.

Then, the bank calculates your loan with the whole interest. The more the lending, the riskier for the bank.

The importance of creditworthiness for getting a real estate loan in Germany

It is good to know that the higher creditworthiness (personal or legal) you have, usually the more attractive the requirements for getting a loan are for you.

It is not surprising if the bank checks your future potential income development before granting a loan.

The reason is the new Real Estate Credit Guidelines, according to which credit institutions should check their customers more carefully because in the future they will have the right to disregard the loan agreements.

Read more on WBG: What is a general partnership or OHG?

A Prerequisite for real estate loans in Germany

Basically, there is a special Prerequisite for real estate loans:

Plan the amount of the installments in such a way that you can pay it with your monthly income and still have enough money for other living expenses.

This is the only way to be sure you can get a loan to buy your favorite house without any financial problems repaying it.

How much equity is recommended?

As a rule, you can also borrow 100% of a property’s purchase price, which is called full financing.

Generally, an equity percentage of at least 20 to 30% is recommended. The higher the percentage of equities, the lower the monthly installments and interest rates.

This means that if you have a higher equity ratio, your loan will have a lower interest rate.

In addition, you reduce your risk by this way, since you have to borrow less money and make sure it pays off.

An important point for getting a real estate loan in Germany

When calculating your considered real estate loan, you should take into account the important subsidiary acquisition costs:

• The costs for property transfer tax
• The notary costs
• The costs for the real estate agency (the agent commission)

The real estate loan and its requirements

Here, the whole requirements for a real estate loan in Germany are presented briefly:

• Legal age
• Residential place and having a bank account in Germany
• Having a good credit rating

Read more on WBG: Self-employment for students from non-EU countries in Germany

Contact us to find out more information about a real estate loan in Germany