Intro
Although Germany is proficient in many sectors, mortgage
provision is not its forte. As the majority of Germans prefer to
rent, mortgages haven't developed in the same way as the rest of
Europe and as a result there are lower LTVs, relatively high
interest rates and tighter lending criteria.
Availability
The foreign investor will struggle to get much higher that 50%
LTV mortgages in Germany and communication is likely to be strained
as few banks speak English. This is a country where the use of an
international mortgage broker really is a must. They may be able to
get higher LTVs and have relationships with English speaking
staff.
Cost
Interest rates can be as high as 9% which coupled with low
yields makes many foreign investors sceptical as to Germany's
investment potential. Banks also tend to charge a high arrangement
fee which is typically 2% of the loan amount. As long as Germans
favour renting, the banks will be very reluctant to provide
attractive mortgage products.
Application Process
The purchasing process is very strict and the banks require
quite a lot of documentation in order to complete their
underwriting process. Most banks only provide application forms in
German so having a good contact that can speak German is vital.
Mortgage Finance from Frontiers Financial Services
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