The German mortgage process in 10 steps

The German mortgage process in 10 steps

Buying a house and getting a mortgage can seem complicated, especially when you’re in a foreign country. To simplify the process, our 10-step guide to German mortgages for expats walks you through all the basics.

Step 1: Check what you can afford

Before you start house-hunting, have a consultation with a mortgage provider (either a mortgage broker or a bank) to get an idea of whether you qualify for a mortgage or a government homeownership loan and, if so, what your budget will be.

Mortgage broker or bank?

Mortgages in Germany can either be taken directly from a German bank or via a middleman like a mortgage broker. Both will offer free consultations to give you an idea of the process and the costs involved.  While German banks provide a direct route to a mortgage, brokers offer tailored advice and investigate multiple lenders to find you the best mortgage product. There are many English-speaking mortgage brokers in Germany who specifically cater to expats.

Online German mortgage calculator

In addition to consulting with experts, using a mortgage calculator like MLP or Hypofriend will give you a quick idea of how much you could potentially afford, taking into consideration deposits, taxes and other fees.

Step 2: Get pre-approval

If you’re satisfied you meet the basic requirements, it is worth submitting an application for pre-approval. This key step means that a mortgage lender provisionally agrees to finance your property purchase. Having pre-approval assures the seller that you can go through with the sale, helping you to stand out at viewings.

Step 3: Find your property

Equipped with a realistic estimate of the kinds of property you can afford, and armed with the knowledge that you will most likely be approved for a mortgage, you can begin your property search. Having an estate agent, who can alert you when new properties come up for sale, can give you a competitive edge.

Step 4: Make an offer and pay the reservation fee

Once you have found your dream home and checked it against our checklist for homebuyers, it’s time to make an offer. It is quite common for buyers to secure properties with reservation fees (0,5 - 1% of the property price and usually refundable). This will hold the property for two to four weeks, while you finalise your mortgage.

Step 5: Finalise your mortgage

Submit your application to your mortgage provider, along with all the necessary personal and property documents. Your application will be processed by the bank, and you will receive a response within three to 10 working days. Once approved, you will need to sign your mortgage contract.  

Step 6: Draft & Sign a purchase contract

At this point, either you or the seller selects a public notary to draft a purchase contract. Once drafted, you need to meet with the seller and the notary to sign. At this formal appointment, the notary will read the entire purchase contract out loud, allowing for last-minute revisions and questions. If you cannot speak German, you may need an interpreter.  

Step 7: Pay closing costs

After you have signed the notarised purchase contract, you need to pay the closing costs from your own equity, including fees for the notary and real estate agent.

Step 8: Pay purchase price to the seller

Several weeks later, the notary will request that you pay the full purchase price to the seller. This includes any down payment from your own equity, with the remaining amount transferred directly to the seller by your mortgage lender. You will be asked to fill out a purchase order form to authorise the payment.

Step 9: Pay property transfer tax

Around six to 10 weeks after signing the purchase contract, you will receive a bill from your local tax office requesting payment of the property transfer tax (Grunderwerbsteuer). Once you have paid this, the notary will instruct the land registry to transfer the property ownership to you, making you the legal owner.

Step 10: Move in

With all steps complete, you are free to collect the keys, arrange your move, set up your utilities, take out home insurance, and enjoy your new home!

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