To help you understand the entire process and who is involved at each stage, mortgage expert LoanLink has prepared these 10 easy-to-follow steps. From beginning your search for the perfect house to being handed the keys to your new home, this guide will ensure everything runs smoothly from start to finish.
1. Find out your mortgage eligibility and affordability
First, find out if you qualify for a mortgage in Germany and understand how much you can afford. You can do this by using mortgage calculators which give you feedback within minutes.
A mortgage repayment calculator answers important questions including the total amount of your financing need and approximate monthly mortgage borrowing allowance. A mortgage rate calculator shows you the latest German interest rates and walks you through factors that can affect what banks offer you.
LoanLink’s online mortgage calculators will give you answers about your potential mortgage in minutes.
2. Get pre-approval
Once you know how much you can borrow, you can apply for a pre-approved mortgage. This will speed up your closing time after you’ve identified a home you’d like to buy. Pre-approval also helps you to focus your search on properties in your price range, as you know exactly how much you can pay.
3. Open a German bank account
In order to secure a mortgage in Germany, you will need to have a German bank account. If you don’t have one already, your mortgage advisor can help you identify a bank. For buyers that are not already living in Germany, after you sign the application form and get an ID verification, your mortgage advisor can receive all required documents from your new bank and return the application, completing the account opening process.
4. Find a house or apartment
You can either search on your own or engage a real estate agent (immobilienmakler). At this stage, you’ll be ready to move quickly when you view your dream home because you’ll already have pre-approval and a German bank account.
Two important points to note:
In Germany, it’s perfectly acceptable to negotiate the purchase price
Once you find the home you want to buy, place a reservation on the property to take it off the market — this will give you some time to organize your home loan
5. Get mortgage expert advice on different financing offers
Once you find a property, it’s important to make sure you get the most suitable mortgage for your particular needs. Mortgage brokers such as LoanLink can help you compare and understand the offers available from over 400 German banks.
During this step, you’ll be able to see specific features including interest rates, monthly installments and special features like unscheduled payments. There are a few things you’ll be need to do to help complete this step:
Gather the documents required by lenders
Consider the different financing options available from various banks
Speak with a mortgage specialist to get advice
6. Apply for a mortgage
Once you have selected the best offer, your mortgage expert will submit the required documents and information to the lender, and you must sign the mortgage application.
7. Get mortgage approval
At this step, your chosen lender performs the final credit assessment. Your mortgage advisor should stay in close communication with the lender to answer any questions on your behalf. After a few days, the lender will provide the final mortgage confirmation and inform you immediately.
8. Personal identification
If you are an international investor not living and working in Germany, the lender might require you to identify yourself in person at one of their branches in Germany. At the same time, you can use the appointment to sign the financing contract and finalize your property purchase. Buyers already living and working in Germany usually do not need to attend a meeting at the bank for identity verification.
9. Notary appointment
It’s important to know that in accordance with German law, there is a 14-day withdrawal period on all financing contracts at no cost. This time is used to finalize the property purchase (which becomes legally binding after signing the purchase contract at a mandatory appointment with a notary).
10. Payment of loan and property tax
This is your final step! During this stage your lender will request your equity payment be paid to the seller first and then they will payout the committed funds once you show proof that this payment has been made. At this point you’ll also get your keys and can move into your new home!
It’s important to know that although you may have already moved in, you’ll only become the full legal owner when your name is entered into the German Land Registry (Grundbuch). Entry takes between two-to-four months, because after you’ve signed the contract and moved in, the tax office will then send you a bill. After your tax payment has processed, your notary will give your tax clearance certificate to the Land Registry and request the property’s ownership be changed to your name.
If you’re looking to buy in Germany and would like to be better prepared, whether purchasing a family home or investing in a buy-to-let, you can download this comprehensive Guide to Buying a Property in Germany. Still have questions? You can schedule a call with the mortgage experts at LoanLink by email [email protected] or phone +49 (0) 30 5683 7535. Services are available in English, German, Chinese and Russian.
This content was produced by LoanLink.