Can a foreigner buy an apartment in the mortgage in Germany? At first sight, it might seem complicated, however, it’s not really that hard. After choosing the most attractive property and making final agreements with the owner or the agency, the contract to purchase real estate is made by German notary office, and here everything is simple. The notary has the power to certify the identities of the two parties (buyer and seller), check the rights of the seller on the property in the Chamber of Registration and look for the presence of encumbrances. After making all the needed checks, the treaty may be created.
The transfer of funds from the buyer to the seller also is done through the notary. The notary is in possession of the trust account, where the buyer transfers the money for the purchase of the property after signing the contract. The transfer of the funds for the property is usually followed by passing the information to the Registration authorities, where the buyer becomes an official owner of the property by all legal means. Once the buyer received the certificate of ownership, then the seller receives the amount from the sale of the property directly from the notary.
Mortgages in Germany
Foreigners also have a possibility to buy an apartment by taking a mortgage, however, it is important to be present in person while the credit contract is being registered. In other words, the mortgage issue by proxy is impossible in Germany. German banks are very demanding. For example, if the monthly payment of the loan exceeds 1/3 of the monthly income of the borrower, the mortgage formalisation can be difficult.
The specifications of the mortgage loans in Germany:
- The interest rates vary from 3% to 5 % per annum
- The consideration of the applicants may be delayed up to 1 – 1.5 months
- The commission of 0,5% is often charged for the application process
- The minimum value of the property should not be less than EUR 60’000
- The foreigner must have funds to deposit minimum the half of the property price
The repayment of the mortgage loan takes place on the classical scheme, thus, fixed monthly payments until the loan has been fully repaid (interests included).
The expenses of the buyer
The expenses that the buyer faces while purchasing a property in Germany is not only the costs of the property itself. For example, the buyer is responsible to cover the expenses of the notarized contract, the charges from the land registry (approximately 2% of the cost of the property). The buyer also must cover the commissions of the broker, which varies between 3% – 6% from the total value of the property. The brokers commission is taxed at the rate of 19%. Therefore, the brokers expenses will cost the buyer between 3.5% – 7,2% of the total value of the property.
Important: In Berlin and its region, the brokers commission is paid by the buyer only. However, ion the other regions in Germany, the brokers’ commission is paid half by the buyer and half by the seller. In Germany, there is no formal property tax to be paid while buying a property. Nevertheless, Germany implies a land tax. For instance, in Berlin the land tax is 4.5% of the total cost of the property, but in other regions in Germany the tax is much lower.
While buying real estate for investment purposes, instead of the living purposes, such as renting the property after completing the sale, the owner must be aware of the tax on income. The rate varies between 0% – 42%, depending on the region and the amount of income.
Thus, in conclusion, it may be said, that you can buy a property in Germany by taking a mortgage loan, it’s not that difficult. The main necessity is to make a 50% down payment of the total price of the property and prove your solvency to the bank. After the property has been registered under your name, you may choose to give your property for rent and live in the other part of the world. Even a minimum cost property will bring from 8 – 10 EUR of profit per square meter, meaning you can extinguish the debt due to the profit ftom the lease.
There are many specialized firms in Germany that will be taking responsibility of your apartment and taking care of the subjects such as, timely payment of the rent, the loan repayments, etc. You may live and work in other country, and all operations of the purchase property will be carried out by the professionals.