The checklist for real estate financing

Financing a property seems unrealistic to many prospective buyers. However, better opportunities are now available than many realize. The supply of properties has increased, and sellers are now more willing to adjust their prices to suit current financing options. To help you keep track of everything during the financing process, here is our checklist.

Financing and real estate experts recommend securing financing before even starting your property search. For example, having a financing confirmation from your bank demonstrates your serious intentions to sellers. Furthermore, the following is important:

Before you start your property search, clarify the following questions:

• How much property can I afford? What is the maximum monthly mortgage payment I can manage? A rule of thumb: Housing costs should not exceed one-third of your net income. Remember to include additional costs such as taxes, insurance, heating, and electricity.
• Should I build a house or buy an existing property?
• What financing options are available?
• How much equity do I need?
• Are there any government funding opportunities?
• How do I determine the financing requirements?

 What documents does the bank require?

• Salary/wage statements for the last three months
• Proof of previous year's income
• Income statement from the previous year
• Income tax return, if applicable
• Proof of equity (e.g. bank statements)
• Signed annual financial statements / income and expenditure statements for the last two years (for self-employed individuals)
• Signed, up-to-date business analysis (for self-employed individuals)
• Income tax assessments for the last two years (for self-employed individuals)
• Schufa credit report
• ID card

What other documents are important for buying real estate?

• New building
  • Architect's contract or the draft
  • Current extract from the land register
  • Cadastral map
  • Land purchase agreement or draft
  • Extract from the register of encumbrances
  • Current development plan of the municipality/district
  • Approved building application
  • Construction description
  • Approved building plans/construction drawing
  • Gross floor area calculation
  • Calculation of living and usable floor space
  • Proof of a shell construction insurance
  • Construction cost calculation (including documents on development costs and information on planned self-provision)
  • Estimate of future ancillary housing costs

• Existing property
  • Copy of the purchase agreement or the draft
  • Current extract from the land register
  • Cadastral map
  • Property exposé
  • If available: Building plans and building description
  • Calculation of living and usable floor space
  • Extract from the register of encumbrances
  • Appraisal report if necessary
  • If applicable, a cost plan for modernization measures (including cost estimates)
  • Informative photos of the property
  • Estimate of future housing-related costs
  • Copy of building insurance
  • Declaration of division (when acquiring a condominium)

Are you unsure whether or how much property you can afford, and where to find an affordable one? Contact us! We'll be happy to advise and support you with your search and financing.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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