Getting a property mortgage in Berlin
Are you interested in getting a property mortgage in Berlin?
Currently, housing property mortgages in Germany are quite attractive with low interest rates and flexible monthly settlements.
Our real estate agency in Berlin offers you the possibility to complete your new home purchase with a property mortgage loan in Germany at the most competitive conditions and rates.
We help understanding German mortgage structures and we advise you on the best loan’s options available from German banks and local mortgages brokers.
We offer you also assistance from A to Z with your mortgage application process in Germany.
Property mortgage structure in Germany
The housing property mortgage in Germany has generally the following standard features:
- 5, 10, 15- or 20-year property mortgage duration.
- Fixed rate or variable mortgage interest rate.
- Binding loan capital repayment of 2% to 3% per year.
- Early loan repayment option from 5 to 10% of initial capital per year
- Property taken as security by the bank
The early repayment option might be granted by the bank with no additional fees and could be used if you intend to pay-off the loan earlier to the bank. The application generally takes from 3 to 6 weeks period during which the property and the borrower profile are analysed.
In order to accelerate your mortgage application time, it’s highly recommended to prepare in advance:
- All the required personal documents
- All property sale documents
Once your German mortgage is approved, you can go ahead with the notarization of your new property in Berlin!
German mortgage rates
In 2020, home mortgage rates have reached historically lowest rates in Germany.
German mortgage rates for home purchase loans could start as low as 0.8 percent, if you contribute with a significant equity payment to the property purchase.
In this way, the mortgage rate you might get will depend on mainly 3 factors:
- Your equity down-payment for buying the property
- Your creditworthiness (personal income situation)
- The property you are intending to buy (i.e. price per square meter)
In any case, it worth it to cease this window of German best mortgage market conditions to get the greatest value for money mortgage ever!
In addition to normal market rates that you might get with a commercial bank, the state-owned bank Kreditanstalt für Wiederaufbau offers German state-subsidized mortgages as well as grants for self-use home buyers with great conditions :
- Up to 100.000 euros with a starting interest rate of 2,75% for self-use homes
- Up to 12.000€ grant per child with no interest to be spread out over 10 years
- Several grants and low-rate credits for energy-efficient properties (either renovation program or new build)
The KFW bank offers also other subsidized mortgage loans for energy-efficiency improvement works, security enhancements, barrier-free access transformation and smart-home settings installations.
In this view, there are several ways to benefit from optimal mortgage rates for buying your new property in Germany.
Getting a mortgage in Berlin for a self-use apartment
If you live and work in Germany, you could benefit from optimal mortgage rates and lending conditions because a German bank always favour loan applications of borrowers with local stable income and financial situation in Germany.
In this case, the amount of mortgage loan you might get for a self-use apartment could match up to 100% of the property purchase price.
The amount of the mortgage in Berlin will depends on the quality of the mortgage application that depends on:
- The personal situation: working status (salaried or self-employed), monthly average income, work contract date, date of settlement in Germany.
- The property: purchase price, property market value, property documents, purchase side costs, own capital / equity.
For a high-level appraisal of your potential mortgage application, please, do not hesitate to get in touch with us. Together we could appraise your borrowing capacity and the suitable property purchase budget you should target.
Property mortgages for investment properties
Buy-to-let mortgages are property loans specifically designed for buying an investment property that generates a steady income. With a buy-to-let mortgage repayment, you could potentially cover the monthly fixed settlements with the rental income that you would receive from your German property. Your repayment rate will be based on the amount of money you expect to get from rent each month.
A buy-to-let mortgage in Berlin gives you also the opportunity to leverage your property investment and to increase your long-term profitability. Indeed, if makes always sense to apply for a mortgage if the interest rate is lower than the yield generated by your real estate investment in Berlin (i.e a property with yield of 3.5% and a mortgage for 2,5%). As an investor, thanks to mortgages, you could invest in 2 or 3 properties instead of one, with same amount of equity. This is called the leverage debt effect.
Getting a mortgage in Berlin as a foreign buyer
In contrast to many European countries (e.g. Austria, the Netherlands, Switzerland …), foreign buyers in Germany have good access to the loan market and can benefit from attractive loans, interest rates and terms.
The standard structure of a non-resident mortgage in Berlin is generally as follows:
- 5, 10, 15 or 20 year fixed or variable interest rate
- Interest rate from 2,7% to 4% depending on the property and borrower profile
- Repayment of at least 2% per year with the option of early capital payment of 5-10% per year
- Loan amount from 35% to 70% (Loan-to-value or LTV) of the property purchase price.
The financing conditions essentially depend on the type of property (new or old property) and the intended use (own use or investment).
The loan application process for foreign investors takes about 4 weeks. During this time, we offer you comprehensive support in filling out the application form and in following up the financing at the bank.
To apply, you need essentially provide proof of income (i.e. the 3 most recent pay slips) and we can forward the property documentation directly to your bank.
Our real estate agency cooperates with a network of German banks, institutional lenders and financing consultants in Berlin, through which we can select for you the best mortgages offers available on the market.
We can also arrange for you to open a bank account with a German bank (Deutsche Bank, Commerzbank etc.) to simplify the repayment process for your real estate mortgage.
Whether you are an investor or a self-use buyer, our team will help you making the right mortgage choice and assist you from A to Z with the mortgage application!
How much could I afford?
You want to know more about the financing possibilities for your property purchase in Berlin? We inform you about:
- How much could you afford for buying a property in Berlin either for self-use or for investing
- Current German market rates and loans conditions
- The processing time for a German mortgage application
- The required funds you would need to close your mortgage
- Type of properties for which German banks offer mortgage financing at good credit conditions
For any questions about mortgages in Germany, simply fill in the mortgage call back form. Our team will get in touch with you with comprehensive information about best loans options for your new property purchase in Berlin.
NB: Please note that, due to the continuous changes in regulations and volalile interest rate markets (especially since 2022), the above-mentioned figures and information are only indicative and non-binding. Errors and update delays can be expected.