Should I Get A UK or German Mortgage?

Should I Get A UK or German Mortgage?

The German mortgage market is fairly conservative – indeed, older British buyers will find it reminds them of the UK mortgage market 25+ years ago!

Although things are slowly becoming more flexible, UK buyers might find it preferable to raise finance in the UK – from a remortgage or other secured loan.

What’s best for you really depends on your circumstances and the type of property you are buying in Germany – if you aren’t sure of your options you should take advice from an overseas mortgage specialist.


Getting A Mortgage In Germany

One of the features of the German mortgage system is that a fairly high deposit is required in all cases. Indeed, many German buyers are now getting around this requirement by taking both a mortgage and a loan to fund the deposit!

Some lenders may also require you to show that you have previously been a reliable saver – requirements vary.

Typical German mortgage terms are based around:

  • Loan of up to 70% of property’s value
  • Maximum term of 30 years / until retirement age
  • Fixed interest rate
  • Repayment only
  • Lending multiple of approximately 3x income

 

If You’re Employed

Expect to have to provide comprehensive proof of both your income and your outgoings when applying for a mortgage in Germany – documents such as these:

  • Last 3 months’ payslips
  • Last 3-6 months’ bank statements
  • Last 2 years’ P60s

You will also need a copy of your passport for your mortgage application.


If You’re Self-Employed

German lenders don’t generally offer non-status (self-certification) mortgages, so you will be required to provide full proof of your and your business’ financial status:

  • 1-2 years audited accounts
  • Last 6-12 months’ business and personal bank statements
  • Previous tax returns

You will also need a copy of your passport and may need a letter from a chartered accountant detailing your personal drawings from your business.

 

Rental Income

German lenders will lend to investment buyers based on potential rental income, but expect very carefully-assessed and prudent estimations.

Buyers looking for a holiday home that will be let out some of the time may find they are only eligible under residential mortgage terms (i.e. without considering rental income).

 

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