The new standing of Germany as the economic leader of Eurozone drove the borrowing rates to lowest historical levels. The market liquidity stays high thanks to insurance companies and funds that are offering competitive financing solutions to residents and foreign investors. German banks offer the most competitive interest rates among other European banks which vary from 2 to 2.5%. The financing ratio, called LTV loan-to-value, depends on the purchase purpose (for own use or renting), on the quality of the property and the income level of the buyer. The loan-to-value ratio is generally around 50% for foreign investors for an investment purchase (buy for rent) and could be as high as 80% for secured projects. Qualifying for a mortgage gives the advantage to reduce the equity amount required for a purchase, increase the total purchase budget available and making one’s investment more profitable in regards of the potential increase of prices and rents in Berlin. Foreign investors could pretend to a higher LTV ratio especially for large investments, implying an established German company. Most popular financing structure on the market remains the 10 years and 15 years fixed rate mortgages.
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