The process of buying an apartment in Germany. Search, obtaining a loan, concluding a contract, paperwork.
History of purchasing an apartment in Germany
The mortgage interest in Germany has become so low that it is more profitable to take out a loan to buy German real estate than to rent the same house.
I will not dwell on the cost and parameters of the purchased apartment. I will say that the monthly amount of interest paid to the bank, plus the cost of owning a house, is two hundred lower than renting such a house on the next floor above. I do not take into account some of the money that goes to cover the cost of the apartment. Indeed, when renting, nothing is invested in the value of real estate for residents.
I started looking for housing in December 2011. The main criterion is to live in the city where I work in order to cycle to the office. There are plenty of offers for the sale of apartments in Walldorf. The proximity to thousands of jobs at SAP encourages both building and purchasing.
I came home from work on Friday, had dinner and sat down at the computer. I went to the ImmobilienScout24 website, filled out the search form, and found several offers. Through the contact form under the ad, I contacted the sellers, writing that I want to see the property. The broker answered immediately. On Saturday morning, my wife and I examined an apartment in a building under construction, which they immediately liked. After a few minutes of trading, I also liked the price. We gave a verbal consent to buy an apartment.
We were lucky. After 7 years, there is no need to regret the extraordinarily fast search and subsequent purchase of housing in Germany. We sold the apartment for one and a half times more expensive and bought a new one. But I won’t recommend taking the first property I come across. Luck and luck are rare, so choosing an apartment should have been more careful.
The next step was to sign a preliminary contract with the seller. We bought an apartment from a firm. Husband and wife, Germans, an architect and a civil engineer, have a joint business. We were invited to the office and discussed the details of the deal. We asked for changes to the layout of the apartment. Finishing work in the house was not finished, so it was not difficult to expand the doorways and remove part of the inner wall. After discussion, we signed a “letter of intent” and paid a 500 € deposit. If we changed our minds to buy an apartment, the money would have remained with the owners irrevocably. And so the deposit went towards the cost of the apartment.
An agreement of intent means that the landlord stops looking for buyers for housing and removes the ad.
Obtaining a mortgage in a German bank
At the time of purchase, we managed to accumulate 20% of the cost of the apartment. I had to look for a mortgage. I used the internet.
During the day, I received several offers by email. I chose Sparkasse, phoned the agent and clarified the details of the contract.
How to choose a mortgage in Germany is described in a separate article. I was looking not at the amount of interest, but at the amount of the monthly installment and at the total amount of the loan repayment. The goal is to pay the bank as little as possible.
Cheap loans do not always allow you to pay off quickly. It happens that the final interest is low, but the contributions to the loan body are small. Or the loan is split into two unequal parts with different interest rates. Percentage is shown as arithmetic mean. But in the end, the amount of money paid to the bank will be higher than if a loan with a high interest rate, but not split into two parts.
Everyone chooses a mortgage payment strategy independently. Arm yourself with a calculator and count the options. When a suitable loan is found, you need to contact a bank agent.
We took out a loan from Sparkasse. The bank agent came home to discuss the details of the contract. The bank received guarantees of the availability of the specified 20% of the total cost of housing and made sure that the income would allow paying for the selected loan. The agent needed account statements and pay slips. In addition, they made copies of passports. Russian citizenship raised no questions. In Germany, the process of buying real estate by foreigners and Germans is no different.
We signed an agreement with the agent of intent to take out a loan and the documents went to the bank. A few days later, an invitation came to the bank office to sign a mortgage contract. We were explained in detail the subtleties of the selected contract and answered our questions. The two-hour conversation ended with the signing of the contract. Good knowledge of German or English is essential when concluding a mortgage agreement. Deal with every sentence. The bank employee will take the time and clarify the details if you ask questions.
By signing a mortgage contract with the bank, we confirmed our solvency to the seller. The bank additionally sent a written confirmation. All that remained was to formalize the deal legally. In Germany, the contract for the purchase of housing is concluded only in the presence of a notary. The seller made an appointment with a notary, agreeing on the time with us.
Conclusion of a contract for the purchase of housing in Germany
A notary in Germany answers that the contract for the purchase of housing is “clean” from the point of view of German law, does not contain “hidden” facts that are not clear to one of the parties to the contract. The official is responsible to the buyer so that the seller does not turn out to be a cheat. The notary is obliged to read the contract aloud in the presence of the seller and the buyer and answer questions, even those arising in each paragraph.
When the notary was reading the contract, we interrupted and asked him to explain in accessible German what he had read. Legal German is such a complicated language that even Germans do not understand one hundred percent. Shyness or negligence is not appropriate. Buying real estate is a crucial step. Misunderstandings can cost thousands of euros.
When the contract is read, the buyer, seller and notary sign. Everyone receives certified copies of contracts. The transaction is declared completed from a legal point of view. Notary services are not free – the official receives 1.5% of the amount specified in the contract. Consider additional costs when applying for a mortgage.
The notary sends a copy of the contract to the city hall where the property is located. The fact of a change in the owner of a home is registered in the land register – Grundbuch. The book lists the owners of real estate in the territory subject to the mayor’s office, indicates the debt “hanging” on housing when buying on a mortgage. The Land Register service costs money. The amount is fixed and depends on the laws of the federal state and the specific city. The entry cost us 500 €.
The purchase data goes to the tax office. Buying real estate in Germany is subject to a special tax. The value ranges from 3.5% to 6.5% of the cost of housing, depending on the land. Completely published data on the forum . The buyer pays the fee, which must be taken into account when buying a German property.
When applying for a loan at a bank, inexperienced buyers do not take into account the costs of recording in the land register, the cost of notary services and taxes. They forget about new furniture and kitchen, improvement of the territory adjacent to the housing, separate parking or garage, the cost of moving. Lack of money after the conclusion of the mortgage is fatal! Mortgage debts make it difficult to conclude a new loan, banks are reluctant to issue loans to borrowed clients. The problem is solved at the expense of monetary losses – loans are given at high interest rates. Add 15% minimum to the cost of housing.
The buyer receives invoices by mail for the above taxes and fees. Be sure to transfer money within the specified time frame, otherwise the transaction will be declared invalid through the fault of the buyer. Get a bunch of trouble. It is necessary to negotiate with the bank how the bills are paid – at the expense of a loan or from their own funds. Payment confirmation must be sent to the bank.
When the seller receives the full amount of money for the apartment from the bank, a time is set for handing over the keys. The seller and the buyer draw up a protocol for the inspection of the property. Found deficiencies, readings of water meters, heating and electricity are recorded. It is necessary to record everything to the smallest detail: the condition of walls, floors and ceilings, window sills, doors – in case of problems with housing in the future, the protocol will become the most important paper that helps to resolve disputes, for example, in court.
Upon completion of the inspection of the property, the protocol is signed and the buyer receives the keys to the front door, entrance, storage room and other premises related to housing.