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
- 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 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.
1.Definition financing needs
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
Tax ID number
No. Children living at Home
Employment probation period: Yes, up to:
4.Income and or revenue (monthly)
Number of Salaries
Regular variable income
Monthly self-employed earnings
Current rental costs
Private life and insurance costs
Pension Fund contributions
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
Year of construction
Year of modernization
Total living space
Thereof rented or leased
Size of the property
Special Design Features
Number of parking spaces/ garages
• 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