Real Estate Financing
Years of expertise meets competent all-round service
A competent advisor, before and after your financing decision
Amortisation schedules? APR? Escrow? The field of real estate financing is large and frequently confusing. Our experts will provide you with competent support, explain technical terms and respond specifically to your individual wishes. And all this from a single source; we save you unnecessary work or mountains of files and accompany you step by step to your perfect financing option.
Why buy?
It is often said: if you can afford to rent, you can afford to buy. In addition, buying a property promises numerous advantages, such as protection against rising rents or eviction, free scope for design within your own four walls, value appreciation in popular residential areas and financial security in old age. In addition, a mortgage is often as high as the rent - with the decisive difference that you are saving for yourself, not for someone else. Buying real estate also pays off for investors, since already-rented apartments are among the most worthwhile capital investments on the market. Especially in Berlin, you can expect relatively low entry prices - compared to unlet apartments - and at the same time benefit from the city's continuing boom and considerable potential for returns.
Common Types of Real Estate Financing
1. Annuity Loan
The annuity loan is Germany's most popular method of real estate financing. The loan rate is made up of the interest and the principal repayment amount together. The interest rate is fixed for a period of 1 to 30 years, depending on your individual needs. While the interest portion decreases over the years, the principal repayment portion increases, since with each payment the residual debt decreases, but the interest is always proportionally based on this and the monthly interest rates decrease accordingly. At the end of the fixed interest period, the remaining debt is repaid, if necessary, through refinancing.
Advantages and disadvantages of annuity loans
Advantages
- Security and long-term planning possible due to fixed credit rate
- No interest rate risk during the fixed-interest period
- Predictable outlook on residual debt after the end of fixed interest
Disadvantages
- If interest rates fall, you will miss out on any possible benefits
- Extra repayments only possible within the framework of the contractual agreements
- In the event of early redemption, fees may be charged
- Possible interest rate risk after expiry of the fixed interest period
2. Full Repayment Loan
The purchase of real estate continues to pay off, as interest rates are lower than ever, often compensating for higher purchase prices. A full repayment loan, with a fixed interest rate over the entire term, therefore appears particularly attractive as real estate financing. At the end of the term, there is no residual debt, no need for re-mortgaging and no interest rate risk.
Advantages and disadvantages of full repayment loans
Advantages
- Can be planned to the end
- Protection against rising interest rates
Disadvantages
- If interest rates fall, you will miss out on any possible benefits
3. Building Society Mortgage
With a building society mortgage, the mortgage is linked to a savings account. You save a contractually fixed minimum savings amount then, after a minimum term, you can either terminate the savings plan and have it paid out, or accept a loan offer that you can use for residential purposes.
Advantages and disadvantages of building society mortgages
Advantages
- No interest rate risk during the fixed-interest period
- State subsidies such as housing construction subsidies, employee savings allowance, etc.
- Extra repayments can be made at any time and at no additional cost
Disadvantages
- If you find your dream property during the savings phase and thus before paying out the mortgage, you may have to resort to an additional form of loan
- Comparatively high acquisition fees (up to 1.6 percent of the target contract sum), which are already due at the beginning of the contract and also come into effect if you decide not to take out the loan
- Interest payments - without repayment offset - over the entire savings phase
4. Forward loan
The forward loan gives you the opportunity to secure follow-up financing for your existing financing up to 60 months in advance.
Advantages and disadvantages of forward loans
Advantages
- You secure the favorable interest rates of today (with a small forward surcharge)
- In return, you receive a high degree of planning security
Disadvantages
- Liability: Should the interest rates be lower than the contractually agreed rates at the end of the fixed interest period, the contractually agreed rates will apply.
5. Combination or Flex Mortgage
There are also variable mortgages, such as combination or flex loans, which combine different forms of mortgage. Our financial consultants will be happy to answer your questions here and put together offers tailored to your needs. Still unsure which financing offer suits you best? Then take our test and find out.
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