Mortgage documents explained: What you need to apply for a home loan

Providers of real estate financing

You can get a mortgage from credit institutions, the savings bank or your bank. To apply for such a loan, it is important to have a good credit rating, stable employment, and a regular income of a reasonable amount. If all these requirements are met, you have a very good chance of having your financing project approved. For success, it is also helpful to have a certain amount of equity capital, ideally in the amount of 10 to 30 percent of the purchase price and ancillary purchase costs. This has the advantage that the loan amount and thus the interest expense are lower.

Documents needed for a mortgage

You prove your creditworthiness by submitting the relevant documents to the credit institution or bank in order to obtain approval for real estate financing. There are sometimes different requirements for employees and freelancers. In addition to proof of your own earnings, you should provide the lender with information about the property and the available equity capital. Read on to find a complete list of mortgage documents required.

Documents to verify creditworthiness

To prove creditworthiness, various documents must be submitted when applying for a mortgage. This list of mortgage documents include a self-assessment, a wage or salary statement from the last three months, the last income tax assessment and - in the case of employees - the last pension assessment. Freelancers submit surplus income statements as well as income tax assessments and returns for the last three years and current turnover figures. Self-employed persons who prepare balance sheets use the current business evaluation prepared by their tax advisor, plus balance sheets, income tax assessments, and returns for the past three years. For civil servants, pensioners, and retirees, the last pay slips, pension statements or income statements of the last three months and the last income tax assessment are required. Proof of health and long-term care insurance and a copy of the identity card or passport are also among the documents to be submitted for a mortgage.

Proof of equity and other lenders

If you want to use not only debt but also your own capital for financing a home, you should also provide the lender with proof of your equity. This also serves as proof of creditworthiness. The documents for this can include, depending on the form of one's own reserves, account or deposit statements, savings balances, or building savings balances. Documents on loans granted by other lenders should also be enclosed.

Documents on the property

In addition to personal information, you also provide information about the property during the mortgage application process. This enables the lender to assess whether the property can serve as collateral in the event of insolvency. The purchase contract or draft contract, a current excerpt from the land register as well as excerpts from the last few months, pictures of the property and a cadastral map showing the property must be submitted. For single-family or multi-family houses, attach construction plans and descriptions, details of the living and usable space and calculations of the enclosed space. For condominiums, information on the floor plan and living space calculations as well as the declaration of partition are necessary.

Watch out for commitment interest

An important factor that you should always take into account when financing a property is the commitment interest. Credit institutions and banks collect this for the time between the payment maturity and the request of the sum. However, many lenders grant a period during which no commitment interest is charged. This is stipulated in the contract and can last up to two years. Therefore, check the contractually stipulated conditions carefully in this regard.

Before meeting with the bank: draw up a financial plan

Good preparation for the financing interview significantly increases your chances of success. Your financial situation will be carefully examined for a mortgage. It therefore makes sense to draw up a detailed financial plan beforehand, which will give you an overview of your expected income and expenses and help you decide on the appropriate repayment rate. The financial plan contains all monthly income such as wages and salaries, income from self-employment or capital assets and all other income as well as expenses in the form of existing building society loans, instalment loans, leasing instalments, living costs, insurance and other regular expenses. Present the financial plan to your advisor during the meeting. In this way, they can plan the best possible financing for you.