There are several reasons why more and more family offices and wealthy people consider to invest in Germany. The following article shows you what to consider if you have decided to buy a property. How to finance in Germany. If you want to know why especially properties in Germany can be an intelligent fit to your wealth management. You can check our article: Buying a Property in Germany – 6 Best Reasons for Foreigners. Let´s take a look at the right strategy on how to finance in Germany.
Use historically low interest rates
Mortgage lending to invest in German properties
The time is NOW. Never in history there had been interest rates as low as today. With an interest often between 1.3% and 2,0% and a house rent between 3.2% and 7.5% financing has become easy and lucrative in Germany. Even more lucrative than in most other country. The question of how to finance in Germany is nearly answered right now. This becomes clear, when you realize that you often can make up to 80% of your investment tax-deductible. As a second big plus on the list, you can use the extreme good financing conditions even if you do not need a financing today. Make a forward loan (interest rate hedging loans); in Germany this is possible up to 5 years in advance.
Check your Finances
You should cover at least the closing costs
Closing costs have increased in the last years and can be quite high on German property. As they strongly influence the way how to finance in Germany they must be considered. To give you a quick overview here are the main costs:
- Notary fees (Notar) = 2%
- Property Purchase Tax (Grunderwerbsteuer) = 3.5-6.5% dependent on area (details see Property Taxes in Germany)
- Estate Agent fees (Makler) = 3 to 6% plus VAT dependent on area, paid by the buyer of the property
German lenders like to see that you can cover at least these additional buying costs yourself. Mortgages of 100% plus the additional costs are available for real property buyers, but having these upfront costs paid by yourself upfront can significantly reduce interest on your mortgage. The discount for paying these costs can be up to 0,45% of the mortgage.
If you buy an older property consider maintenance and renovation costs. New windows, electric wiring etc. can come up and add. If you are buying to make a profit by renting the property, you should calculate the local property prices against typical rents in the area you want to buy. This may help to calculate your profit. Always make sure you can carry all the costs even when the property is empty at any time. Of course if we help you to buy a property in Germany we make sure to do all these calculations for and with you.
Real estate as an investment
or for owner-occupiers
In times of crisis, property values have always proven to be an investment alternative. Of course, in the proper incorporation into your portfolio. Top location of the property is the prerequisite key for your long-term sustainable investment. Accordingly to this fact, it can be particularly useful to examine whether to buy a property as a conservative investment, or as an owners-occupied property. Check our article Buying a Property in Germany for more details. Often our customers buy properties in Germany as their holiday or shopping destination, what can be an affordable alternative to rent an object in the same area regularly. The concept for your mortgage can be quite different for these to scenarios.
How to finance in Germany?
Get the best Mortgage Deal!
It is wise to check out financing options as broadly as possible. Never just settle for what your own bank may offer. As your independent mortgage advisor, we will discuss with you how long you need your financing and which bank or lender offers you the best deal. 100%plus mortgages are available to German based investors. If you will use the property as a holiday destination for example this could be the case. For non-domestic buyers no more than up to 80% mortgages should be considered to get a fairly good interest.
With over 300 partners in the real estate, investment and financing business, we can do marvelous things for you. As your independent financial advisor we help you to find the perfect financing concept and the lowest interest on the market. Connect with us – We help you to make your property deal in Germany work flawless!
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