Getting an expat mortgage in Germany

Expats living and working long-term in Germany may need advice as regards taking out a German mortgage on their dream home.

The vast majority of expats on long-term reassignments in Germany as well as those with their own businesses will be able to get mortgages to finance their property purchases. EU citizens have exactly the same rights as German nationals and, Brexit aside, this status is expected to continue into the future. Employees as well as business owners have the same choice of banks for their mortgages, with even expats on fixed term contracts able to apply if they’re working in sectors such as healthcare and IT or are employed by a university.

For those with four-year Blue Card residency permits, the choice of banks is smaller, but those who will grant an expat mortgage usually offer competitive financing to those on fixed term contracts. If you’re an entrepreneur or own a small company, that’s also fine, provided you present two or three financial statements proving your ability to pay back the loan as agreed. For all mortgages, the borrowing cap is 100 times the net income of the applicant. If the German language isn’t your strong point, using a recommended independent mortgage consultant is the best way forward.

The bad news is that, unlike in many other EU member states, the ancillary costs of getting a mortgage are on the high side. Real estate transfer tax takes between 3.5 and six per cent of the full purchase price, with each German state seemingly charging a different amount! Solicitors’ fees come out at two per cent and estate agents’ charges average between 3.57 and 7.14 per cent, with these expenses expected to be paid out of the buyer’s personal equity.

Securing a suitable mortgage isn’t the end of the bureaucracy, as land charges need to be entered in the registry and buyers will need to comply with other disbursement regulations. If your loan is fixed rate for a ten year period, renegotiating the rate will be necessary. Independent mortgage consultants will offer follow-up financing after seven years, often meaning the buyer can secure a better deal than when the purchase was made. After the full 10-year term is up, it’s also possible to get an equity release through a revaluation by your mortgage provider bank.