Getting a mortgage from a German bank

Getting a mortgage from a German bank

Obviously banks have different mortgage terms, internal approval procedures, and  different regional principles and different motivated employees.

But in summary only 3 core requirements matter:

- Mortgage terms (low interest rates, fixed and or floating rates)

- Mortgage processing time

- Transparency of fees, additional funding programs, prepayment interest

Banks in Germany

- Sparkassen

- Volksbanken

- Private Banks (Deutsche Bank, Commerzbank, Santander Bank, ING Diba, Postbank)

According to the EU law each German bank guarantees the repayment of the deposit till 100,000 Euro. Everything above 100,000 Euro are excluded from the guarantee.

Both Sparkassen and Volksbanken are each independent and

have their guarantee schemes, which go beyond the legal requirements.

The mortgage concept in Germany

The concept of leverage is nothing new. However, applying leverage to bonds and equity is inherent with higher risks, and only available for investors with a lot of experience in trading financial products. To use leverage in a prudent way, you need an asset with predictable cash flows and low in price fluctuations. This is why Germany has so much value in its real estate market where you generate predictable positive cash flows through rental income. Even during the subprime crisis of 2009, Germany demonstrated robustness and prices went down moderately.

The thought process of banks in regard to lending:

A bank will only lend against collateral (e.g. a property)

Any loan amount above 80% of the purchase price is the risk area for the bank (Blanco).

IIf the bank doesn't trust you, they won't give you a loan

Banks usually only finance properties in their region.

Trust can be built through own equity, a good credit rating, a very profitable property, and long-term business relationship.

Financing: Mortgage Application

1.Definition financing needs

Owner occupied

Partially rented or leased

Rented or leased

Are you applying with another borrower

2. Personal Information

FIrst and Last Name

Street, House Number

Date of Birth

Country of Birth


Marital status

Tax ID number

No. Children living at Home


Employment Status


Employed since

Employed by


Employment probation period: Yes, up to:

4.Income and or revenue (monthly)

Salary (net)

Number of Salaries

Regular variable income

Monthly self-employed earnings

Pension Income

Child Allowance

Other income

5.Expenses (monthly)

Current rental costs

Private life and insurance costs

Pension Fund contributions

Health Insurance

Other expenses

6. Other real estate assets

Number of properties

Total area in sqm

Current outstanding debt in Euro

7. Existing Debt

Current remaining debt

Current monthly installments

Ending on

8.Property Specifcations

Property address

Year of construction

Year of modernization

Total living space

Thereof rented or leased

Size of the property

Construction Type

Special Design Features

Special Features

Number of parking spaces/ garages

How does the application process work in Germany?

• The banker receives the well-prepared financing documents from you.

• The banker summarizes everything in a loan application and gives its own vote.

• The front office forwards the loan application to the back office.

• The back office decides on the basis of the loan application alone whether or not to grant the mortgage

• For larger sums, more decision makers have to give a consent

What are the costs of buying property in Germany?