Getting a mortgage in Germany

88 posts in this topic

Rented the last time I lived in Germany but have now sold the house in the UK with the equity sitting in the bank.

 

Rent in France at the moment but moving back to Germany in 18 months and need to decide whether to rent or buy. Was wandering how easy it is to get a mortgage and what kind of % loan is generally on offer.

 

Any house owners out there that can give me some advice will sure be a appreciated.

 

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First of all be aware that the German housing market is nothing like the UK market. People tend to rent here until they have kids then buy a plot of land, build a house on it and live in it until they die. Well that's my thoughts anyway on why despite f***ing low rates, nobody is buying. Plus 99.9% of homeowners have fixed rate mortgages so when the ECB cuts rates, it doesn't affect them, and they can't refinance at a cheaper rate without incurring penalties.

 

What I'm saying is that the market is pretty static, so don't expect to recoup your tax and fees if you intend to sell within a few years.

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The rates are at there lowest ever in the history of West Germany, ( I know as I`m refinancing at the moment ), I`ve had an offer for 4,55% ( thats a real rate not the b**s 4,16 rates you see on the loan sites ) so its the best time ever to

get a loan.

 

The only drawback is unless your a steady income earner and/or have

security the banks probably won`t give you a loan, as they`re earning so little

profit on loans at the moment and they`re paranoid because of the number of bank loses on loans over the last 5-8 years.

 

Even for my refinancing I had to assemble about 15-20 "pieces of paper" the bank wanted. It took me weeks if not months to organize it all.

 

So if you can buy, if you can ...

 

ps. Yes the rates are fixed but that works in your favour if the rates are low as they are at the moment, the historical average is about 8% and we`re almost at 4% so its a loan takers market in that sense.

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We bought a house in 86. Got in just as the interest rates and house prices sank. First we got a loan fixed for five years. The interest rates went up and down again as we came to renew again at the end of the 5 year period. This time we took out the fixed interest rate for 10 years as it was only about 4%. However, we have made little capital gain on the house. If you are only going to be here for a couple of years you may find if you buy something it may be difficult to resell quickly. The house market is very stagnant. The Maklers/Agents take a cut of around 5-6%. I guess you could still reckon with 10% costs on top of your house purchase. Still it is nicer to live in something that is yours rather than paying rent.

 

Getting financing wasn't difficult either - especially if you have a big deposit and a secure employer but I would keep away from the financing deals where the house is paid off via a life insurance policy.

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What a wealth of information you lot are!!

 

I am starting to think that there probably wont be any great benefits to buying, although colonialgirl does have a good point about it being nice living in your own house. We will be there for 4 years but nothing is guarenteed with the army.

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If it will only be for 4 years, I'd advise against buying, though we have bought ourselves. In my opinion that is too short a time to be messing with buying in Germany. As previous posters have said, you will not cover your costs within this kind of timeframe, so you will end up losing money compared to renting. My advice would be to put your money into a long-term higher interest bearing account. Your money will be absoltely safe, and you'll be getting a better return on it than buying a house in Germany... and right now I'd also advise against buying in the UK... the market bubble there is just toooooo inflated for my liking... I really believe a lot of people are going to get badly burned in the near future.

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and right now I'd also advise against buying in the UK... the market bubble there is just toooooo inflated for my liking... I really believe a lot of people are going to get badly burned in the near future.

Don't go spreading stories like that until my house sale goes through!!!

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in germany house buying is a long term thing, unlike in the uk were you buy and sell , here is is literally for life

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Thanks all for the great info!!! :)

 

As, right now, my life is not as static as the German house market then renting its gonna be.

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what about buying to rent in germany? surely thats got to be a winner with all those long term renters. Also as house prices are comparitivly low and mortgages cheap at the moment I would say buying to invest could be a good idea. My theory being that the alarming decline of future state pension funds will have a knock on effect on people buying into property for retirement security? Anybody care to expand? :ph34r:

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I had given that a thought but its not for me. I rented my house in the uk when I first moved to Germany but the worry about getting tennants and how it was treated was not worth it with not being ner enough to keep an eye on it. Living in and then renting a house in Germany will have much the same problems except I could end up anywhere as far as Africa on the next move.

 

One question stemming from that though is what happens in Germany if a tenant does not pay the rent? In the UK its a nightmare waiting to happen.

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One question stemming from that though is what happens in Germany if a tenant does not pay the rent? In the UK its a nightmare waiting to happen.

That's one of the reasons I'm selling my house now the last lot of tenants didn't pay rent, wrecked the house big time (it cost me thousands to put right), threatened my next door neighbour with a gun and were the main suspects in the burglary that next door suffered.

 

I was unwittingly responsible for the introduction of gang culture into a quiet little cul de sac!

 

I should point out that it is my house in the UK I'm talking about! The neighbourhood here in Germany is still intact, but give me time!! ;)

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Investing in the domestic property market here is a waste of time and money,

the people who rent have all the rights, the property owners have none, what

happens if someone doesn`t pay here ?

 

Well nothing, you loose loads of money, it can take up to 1 year to get them out of your place and you`ll never see that or any legal costs paid again.

 

There is no appreciation, we`ve had a house over 10 years now and its not worth 1 iota more than when we bought it, possibly less as its "older" ( there is a german obsession with a houses age ).

 

We now rent out our house and because the tenant is okay its alright, but we make nothing on it. The last tenants were impossible and caused us immense grief.

 

The cost of a loan is normally at least twice what you`ll get in rent, even with negative gearing its just not worth it, as the owner your liable for everything and get nothing in return.

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Surely there would not be such a large proportion of flats available for let if there were no gains to made from renting out.

General problems could probably be reduced by employing an agent to manage the property, although at cost.

I would also point out the german mild manner and general respect for others property combined with their greatest fear of losing money through the excessive missuse of lawyers and police.

 

Has anyone been successful with property in Germany? :ph34r:

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@ DaveR

 

That 4.55% you mentioned, is that fixed? For 5 or 10 years? Which bank group?

 

As we ourselves are at our 10 year point and about to renegotiate our mortgage, we have been offered 5% fixed for 10 years by the Sparkasse and would like to see if there are better offers out there.

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One tip, get an independant survey done on your house, German banks do not do this! Its very much "sold as seen", we are in a long and difficult court case against the former owners of our house, who left it in a shite state, but "papered over the cracks". Proving this in court is extremely difficult. The repairs will cost 20.000€, and we cant sell the house (who the f*ck would buy it?!?) :(

 

Our solicitor said clearly that if a survey had been done there would have been no way we would have bought the place.

 

And the bank? A very helpful "not our problem".

 

Any kind builders out there... ;)

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The 4.55% is "gone baby gone", the interest rates have just snuck up about

.2 % in the last 7 days, I use

 

http://www.interhyp.de/interhyp/servlet/in...p?cmd=showFrame

 

for a rough guide but add .5% as those rates they are showing are b%&$sh*t

, I also registered and did all the paperwork with them.

 

Once I`d done all the paperwork ( its a fair amount ) I then sat back and played

Voyeur, I checked the rates every day and then when I saw a big slide I asked what "the going rate" was.

 

Now once you`ve got all your paperwork done, you put it in a folder and go to all the local banks, hand it over, and say "make me an offer", at the same time you show them the offers the internet banks are making ( print them out and hand them to them ) if they need extra stuff they`ll ask for it.

 

They then make you an offer which is binding for them for 1 - 2 weeks. If you time it right, you`ll have up to 5 different offers at the same time,

you then look at the lowest ( normally the interhyp ) then you ring your local bank and say, "I`d love to do business with you, but the other offers are .2 or whatever cheaper, if you can match that or .1 above I`m with you.

 

My housebank initially made an offer for 4.85%, I said "not good enough", I waited then got 4.75%, I then signed the offer, 4 weeks later they`d finally gotten all my doco checked and had the contract written up then I said "sorry guys, interest rates are down another .2% in that 4 weeks, either you give me 4.62% or I`m not going to sign the contract.

 

They did it, then I had something else change in the contract, ( they had to rewrite the contract 3 times for me )

 

The 4,55% was from the bank where I had the first mortgage,

 

http://www.muenchener-hyp.de/

 

I got that after I terminated the 10 year loan ( at the end of the 10 year fixed interest ), I still didn`t take it, I took the 4,62% at my local bank and got a bonus of a Dispokredit of 10,000 Euro at 8.5%.

 

This all took 6 months and lots of stuffing around, if you`re not prepared to do your homework and go to lots of banks and play them off against one another and research the theme then they won`t do this for you, they knew that I knew more about "the game" than they did.

 

During this time I terminated my bank account at my "old" house bank because they didn`t give me what I wanted, I told them "either you give me the rate I want or I`m gone", they didn`t, I went. That was a major hassle, but you can`t bluff.

 

For me every .1% means 1300 Euro over 10 years.

 

Good luck.

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I`m going to add one more thing, ever wonder how a bank works out the interest rate they charge and their profit ? Well its easy, apart from the "risk assessment"

based on income, security, sort of house they look at :

 

VDH Pfandbriefkurve, this is the cost of borrowing for them, they then add ,6%

to that as "their margin" and thats your offer more of less, its at :

 

http://www.hypverband.de/hypverband/

 

Now your job is to reduce their margin, you can`t change the VDH, you can only negotiate the ,6 % thats what they live off.

 

Knowing this helps you know exactly whats possible and whats not, whats a real

interest rate offer and whats not, alot of the Internet Banks show the VDH almost directly on their site, its deception plain and simple, the banks are`nt charities, they want profit, its just a question of how much.

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how difficult is it today in 2011...almost 12... to get a mortgage. What is the minimum you need, Help!

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