Mortgages in Germany: what nuances do you need to know about?

Many people want to have their own home in Germany. One of the main reasons is the fairly high rental rates for real estate. If the buyer at the time of choosing a house or apartment does not have the required amount, he can apply for a mortgage. Banks have recently been offering rather low interest rates due to which such a deal may be quite profitable, and in 10-15 years the buyer will become a full-fledged owner of housing.

What documents are required?

The principle of mortgage lending in Germany is standard. The bank gives the borrower the amount necessary to buy a particular property, and he undertakes to pay it along with the accrued interest.

Typical documents that must be submitted to obtain a mortgage:

• passport;
• registration document in Germany;
• statement of income for the last year;
• a certificate on the family members;
• information on the appraisal of the property;
• documents for the purchased apartment or house.

Only after analyzing all these documents can the bank make its decision and conditions for a specific borrower.

What is important to consider?

One of the features of mortgages in Germany is the presence of a “Tilgung”. The legal explanation of this concept sounds like "the amount of repayment of the body of the loan." In practice, it represents the percentage of the total amount of the loan that must be repaid in a year. You cannot exceed it.

To get more value, banks often set “Tilgung” to a minimum. As a result, not knowing about such a nuance the borrower simply does not have time to pay the entire amount within the allotted time. For the rest he must retake a loan from the same bank. Considering that this will happen in 10 or 15 years, interest rates may turn out to be completely different, and accordingly much more will have to be paid at a later point. Therefore, it is very important to pay attention to “Tilgung”, especially since it is necessarily prescribed in the contract.