Unless you have the available equity in your current property or sufficient savings, it is likely that you will need to obtain a mortgage in order to purchase an apartment in Germany. German mortgage applications require you to fill out some self-disclosed financial documentation known as a Selbstauskunft in which your finances will need to be declared. This will mean most mortgage lenders will turn down an application if you cannot prove you have had an annual income of more than €20,000 for the last couple of years. Furthermore, your debt-to-income ratio will be assessed to ensure that the repayments you will need to stick to won't exceed 35 percent of your monthly salary. Bear in mind that if interest rates go up, this figure could easily change. German mortgage lenders investigate borrowers' financial backgrounds more thoroughly than in many other European states. Part of their due diligence will include obtaining a SCHUFA report. This will detail your credit score, among other things. Past borrowing may not necessarily mean that you have a low credit score so long as you have serviced your debts properly. In this sense, you should plan your finances so that your debts will not damage your chances of receiving a home loan.

In addition, overseas buyers will usually only be able to borrow from mortgage lenders in the region of 55 percent of the purchase price of their intended property. If you live in Germany and want to buy an apartment to live in, then the equivalent proportion is 80 per cent. Either way, it is likely that you will need a significant down payment. Saving for a downpayment requires significant financial planning. that will often involve saving up, of course. That said, no-deposit mortgages are available if you do not have sufficient funds for a down payment. Further financial documentation may need to be produced to obtain no-deposit mortgages and specialist advice from an expert broker will often be most beneficial to ensure that the lending on offer is suited to your circumstances. Zero-deposit mortgages are helpful but should only be sought by certain types of buyers.

When you look at your finances prior to buying an apartment in Germany, you need to assess more than the purchase price and the level of savings and equity you may have to cover any down payment. You will also need to consider the so-called closing costs associated with such purchases. Closing costs are basically the professional fees you will need to pay out. These might include structural surveys, mortgage broker fees, legal and registration fees, estate agent's commissions and even mortgage application fees. On top of this, you may have some extra costs to bear, such as setting up utilities or payments for removals services. Your largest closing cost will be the property tax you must pay when purchasing an apartment in Germany, which varies between federal states. In Berlin, the property transfer tax is 6%.

Let's take a look at a typical example of what you might need to pay to buy an apartment in Germany today. An apartment with a purchase price of €500,000 would normally mean you'd have to have a €100,000 deposit, leaving €400,000 to pay off plus your associated closing costs. For an apartment of this size, you'd expect to have to pay €17,500 in estate agent's fees, about €10,000 in legal costs and €30,000 in real estate tax. Overall, this would push your borrowing requirement up by €58,200, making your mortgage approximately €458,200. Thereafter, your monthly repayments would necessarily reflect the length of time the mortgage has been calculated over and any period of fixed interest rates that have been built into the borrowing arrangement. To calculate exactly how much you will need, use our financing calculator.

Financial planning for a real estate purchase in Germany will very much depend on your individual circumstances. While interest charges are historically low, these may not be such a high priority. Therefore, older people with potentially lower borrowing requirements and shorter mortgage repayment terms will necessarily need to focus more on the fixed costs, such as the legal fees they will need to pay. Younger people who may be borrowing over a 25 or even a 35-year period, on the other hand, need to consider that interest rates will likely go up in those time periods, so their plan needs to have more leeway built into it. Overall, financing a new apartment in Germany means having to make lots of decisions which is why expert and impartial advice can be so beneficial. Finding the right place to buy may be what you are concentrating on. As such, the financial side of things can seem like an onerous chore. However, you should always ensure you know exactly what sort of long-term financial commitment you are getting into. Therefore, a sound financial plan put together by someone who can tailor their advice to your priorities makes so much sense for so many buyers.