Beginners Guide to Mortgage in Germany / How to get a Mortgage / Mortgage Process, Terms & Documents

Published on November 19, 2020

Latest guide related to creating passive income, earn money quarterly, easy passive income, and Passive Income Ideas in Germany, Beginners Guide to Mortgage in Germany / How to get a Mortgage / Mortgage Process, Terms & Documents.

How to get a mortgage / credit / loan for a property in Germany.

  • Link to my video where I explained “Real Estate Buying Process in Germany”
    https://youtu.be/mA1B2DmhWWM

  • Link to Part 2 video will be updated soon
    https://youtu.be/wGE71I_mhC0

Part1:
– Terms used by banks in Germany
– Who to contact
– What information bank need to give an offer
Part2:
– Documents required by the bank
I will add the link of the video soon.

Part 1.1: Terms used by bank in Germany

1) Darlehensbetrag (Principal): How much credit you want to take
– 100% of purchase price or less
– More than 100%
– Finance nebenkosten (Interest rate might increase)
– Finance renovation costs (Usually interest rate remain same)
2) Tilgung: Monthly installments you will pay to bank
– Not mandatory to payoff whole credit within mortgade period
– X Euros per month (eg: 600Euros)
– Y percentage (eg: 2%)
– pay off 2% of the mortgage per annum
(Tilgung% of Mortgage) + (Interest per annum)
– monthly installment = ____________________________________
12

Example:
Mortage = 200k
Tilgung = 2% — 2% of 200k = 4k per annum
Interest Rate = 1% — 1% of 200k = 2k per annum
Monthly installment = (4k + 2k) / 12 = 500 Euros

3) Sollzinssatz: Interest Rate
– Historically lowest interest rates
4) Dauer der Sollzinsbindung: Duration of fixed interest or Mortgage Period
– Longer the period higher be the interest rate
– Recommend to have fixed interest rate for your mortgage
5) Sondertilgung: Special repayment
– Pay X% of Principal once every year without penalty
– eg: 5% of 200k = 10k can be paid free of charge
– Paying sondertilgung is optional
– Reduces the principal quickly
– Pay less Tax 🙂
– No sondertilgung option reduces the interest rate by 0.01 percentage point
6) Restschuld: Principal left at the end of credit period.
– Can be refinanced by the same of different bank

Part 1.2: Who to contact

  • Go to independent brokers like Interhyp or Dr Klein or Check24, etc.
  • Primary purpose is to get information
  • Do not believe broker’s word blindly
  • Letter by broker is of very little to no value

Part 1.3: What information bank need to give an offer

PERSONAL
– Net monthly income
– Sources of income
– Job
– Business
– Rental income
– Savings
– Your living situation (On Rent or In your own property)
– Other loans or credits
APARTMENT
– Price range
– Want to buy a new or old apartment
– Rent the apartment or Live in it

  • Go to your Home bank
  • Bank gives an initial Offer
  • Ask for “Credit Eligibility” letter
    • May take 2 – 3 days to get the letter
    • Increases your odds to get an apartment ————————————————————–
      DISCLAIMER:
      I am not a financial or real estate advisor. My videos are for educational purposes only and merely cite my own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial or real estate advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!

Passive Income Ideas in Germany

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