One of the most challenging aspects of life as an expat is finding and buying a suitable home.
For the majority of working expat professionals, renting a condo is perhaps the easiest and most convenient option, especially for those on shorter-term contracts. However, for those with families, entrepreneurs working on start-ups and those planning on longer stays, buying a property might be the best idea as well as an investment.
For expats living and working in Germany, it’s sensible to consider all options as regards house purchase before the search for that perfect property begins. Starting with an initial affordability check using a mortgage calculator will provide you with an idea of your financing needs, thus avoiding the disappointment of viewing an unaffordable perfect home. Buyers are given an accurate estimate of their monthly repayment costs as well as the fees required when purchasing a home.
Use of the mortgage calculator can let you work out different scenarios and figure out the best mortgage strategy for your present financial circumstances simply by adjusting down payment amounts, the length of the loan and unscheduled expenses. Due to housing shortages in many major German cities, a pre-approval of your mortgage can save time and money for both buyers and sellers, as it confirms exactly how much you can afford and gives the seller confidence in your offer.
To get pre-approval you’ll need to complete an application, submit the required documentation evaluating your financial situation and wait for a few days until the certification comes through. There are no restrictions on expat property purchases, but borrowed amounts depend on expats’ residency status. If you’re a permanent resident, up to 110 per cent of the price can be had, allowing you cash for notary fees, agents’ fees and property taxes. Limited residency status gets you 100 per cent financing, but foreign investors not living or working in Germany can only borrow up to 70 per cent of the purchase price, forcing them to cover the rest out of their own pockets.
As regards interest rates, the larger the down payment the better the rate, and the length of term also affects the rate. If you’re planning to pay off in a shorter period, your interest rate will be lower, with 10-year fixed terms offering the best rate. Should you require a flexible arrangement allowing you to pay off faster, check for lenders who allow unscheduled payments.
Checking out Germany’s state funding programmes such as the government-owned KfW Bank with its low-interest funding programmes aimed at helping residents buy their homes can save money. Requirements and advantages of programmes related to energy efficiency can be explained by your lawyer, and buyers can save via extremely low interest rates and actual grants where possible.