Saving to buy a house - Germany

We have just found out that we will more than likely be spending alot longer than we thought in Germany. Thinking of the future and the price of houses to rent, it would be better to buy. What sort of experiences have you had with buying and saving to buy in Germany? I did a search on here and read that Bausparen is not the best way to save but I don't really understand any of it (still paying back the last few installments of student loan!)
I want to atleast sound as if I know what I'm talking about when I go to see the bank in a couple of weeks so any tips on what to ask for? I know that we have to start saving for a couple of years atleast before we can buy but we can save quite a lot every month.

I would like to help, but the post is a bit waffling. Asking people for experiences about saving and buying is rather vague. Also are you reaalllllly in the UK or here? I can't see you need to "be prepared" for this really. Just go to your bank and open a saving account. They may or may not be the people you ultimately choose to mortgage with in x years, so nothing much to worry about for now. It's basically NOT something you can screw up. Interest rates are crap everywhere, so that is a non event.

p.s. Lots of threads here on the merits of buying or renting. Renting is cheap here, and house prices don't go up, so I wouldn't buy in a rush or as an investment!!

What's "a lot longer "?

When you buy property in Germany you need to allow about 10% of the purchase cost to cover taxes and other fees.
And as JE said, don't expect a quick return.

If you don't have any experience or knowledge then only get advice from people you can trust. StarShollow on this board is a good person to start with. As JE states you may have to be a little more precise with your questions but principally he has a lot of experience with this sort of thing and may be able/willing to help you. Try sending him a PM. Otherwise search for Interhyp who helped me and try them.

As with everywhere else on the planet having more money in Germany is never going to hurt your chances of buying the place you like

I joined when I was still in UK so now I'm in Germany I forgot to update the profile, I just got here. I'll just go and get advice at the bank but I thought some of you might have been in a similar situation, just thought this would be a good place to chat about it as a few messages on the search said Buaspar isn't good and some said it is good.

A lot longer means that the initial job contract of 2 years is being made permenant so we only leave if a better job comes up, we can stay if we want and so far I don't se ewhy not. It's a nice place and when my German is better it'll be great.

That be because you are still new in Germany

We have and we've already typed in our words of experience, sometimes multiple times - try using Google to search this board, the posts are all there to be found.

If you have any specific questions then fire away...

Advice: Perhaps forget "house" given that the norm is more often an apartment here, particularly as a first buy. Think in terms of 30% deposit. Average house where I live ("average" Germany) costs almost 400k. Bottom end row house in a bottom end area, about 220k. So that'll be upto 60k + deposit for bottom end...in a nation that might want up to 50% of your salary in tax. Thus, your expectation that you will have to save a lot is probably right (in anything other than a dirt poor area)! As JE says, the most important thing often with saving is getting on with the discpline of putting your money away - the vehicle or the odd 1% on interest is usually less significant.

And I suspect that "Bausparen is not the way" often translates as: "but I thought it meant I got a large wodge of free money to buy a house with but in reality it's small beer and inflexible"

it is just as swimmer says: saving means most of all forgoing consumption. Or, to use a phrase of J.P.Morgan: we don't get rich by the money we earn but by the money we do not spend...

Having said that: from a professional point of view I am not a fan of the German "Bauspar" mania, most of the time it is a sad deal with no real yield worth talking about. But the benefit can be to be locked in monthly contributions with such a plan instead of too flexible a savings plan otherwise. Yet, if someone wants to commit himself to saving proerply for a mid- to long-term goal, there are better means to achieve that if only some personal discipline for savings can be assumed.

The deposit/downpayment will mainly depend on some individual issues: are you employed or self-employed, proof of more or less stable income over the last 2-3 years etc. Even in Germany 100% financing is possible (though of course expensive) if a certain financial stability can be proven to a bank. When the time comes, get the help of an independent broker who can check with a large number of banks to see what the market can offer to you.

Cheerio

Hi, we are also thinking about buying an apartment in Germany. We have been working in places out of Germany so most of our savings are outside Germany. We are based in Munich for two years now, and it came the time that we've decided to buy ourselves an apartment. The apartment that we want is being built so the payment will be made directly to the constructor in several installments. While asking the bank for a loan to cover what we cannot pay with our savings, they (the bank) came up with a rather unexpected demand. They said that all our saving that are going to be used to pay the apartment have to be here in this bank in Munich.

Did someone had similar experience or knows if there are any legal obligations that force us to put all our savings in the bank the loan is being requested from?

Thanks
MMC

If you claim that your savings are going to pay for the part of the purchase price that they won't be financing, they're certainly entitled to see - or even have control over - the money, to ensure it's still there when it comes time to pay out. I'd say this is a perfectly normal and reasonable demand.

Of course don't forget that the German property market is not like the UK. If you buy a house in Germany, it is often for life!

Germany has one of (if not the) largest rental markets for property in the EU. This therefore means that there are not as many people buying houses/apartments and this has an impact. So if you decide to sell later then I have heard that it can take up to 2 years to find a buyer. And because of the taxes etc. already mentioned and the low growth rate of the property's value (especially compared to the UK) then unless you are lucky and have the right place in the right place at the right time then I would say it could easier take 5 years before you could even get your money back. So selling before then could mean a loss.

Thanks JeffZ, dj_jay_smith for your answers. However there is still a part that I am not quite getting. The first installment, which would be due immediately, is payed using the loan and part of our savings already in the bank, the remaining 6 will be payed during 2010 using our savings. Now the German bank is basing the loan approval on our net income and other expenses, which is normal and understandable. Once this is approved, in our opinion the bank should only control that every month and for the next 10 years we pay the agreed amount. Since we agreed with the constructor that he would be receiving the payments directly from the bank abroad and not from the bank here in Germany, I could understand if the constructor would like to confirm our financial status. I would be also ok if the bank wants to check our financial status abroad. Now Why would the bank here in Germany want to control something that is not influencing in any way our capabilities to pay the loan. I am sorry to say but unless there is a real legal obligation, this seams totally unreasonable. Could someone confirm if we are legally forced to do this? Thanks