How do I find the right mortgage financing?

Since the interest rate shock, many prospective buyers consider financing a property difficult. However, financing a property is still possible – with proper preparation. Read on to learn how to find the right financing and what you need to pay attention to.

Analyze your own financial situation

Before you start looking into banks or financing options, you should carefully examine your current financial situation. How much savings can you contribute to the purchase? At least 20 to 30 percent of the purchase price is recommended to secure favorable terms. How high can the monthly loan payments be without overextending yourself financially? In addition to the purchase price, also consider ancillary costs such as notary fees, property transfer tax, and real estate agent commission.

Choosing the right form of financing

There are various financing models for buying real estate. The most common are:

Annuity loan

The fixed-rate mortgage is the most common form of real estate financing. You pay a fixed monthly installment consisting of interest and principal repayment. The advantage is financial security, as the installment remains constant.

Fully amortizing loan

This is a financing option where you repay the entire loan amount by the end of the fixed interest period. This saves on interest costs but requires higher monthly payments.

Building savings contract

A building savings contract can be a good addition. With this, you save capital over several years and later secure a low-interest loan.

Variable loans

With this type of financing, the interest rate is adjusted regularly. This can be advantageous when interest rates fall, but carries a risk when interest rates rise.

KfW funding and other government support

Check if you are eligible for government funding programs, e.g., the favorable KfW loans or regional subsidies for families or energy-efficient construction.

Secure the best interest rate

The interest rate is a major factor in determining the cost of your loan. Therefore, compare different offers to find the best rate. You should also carefully consider the fixed interest rate period. The longer the fixed interest rate period, the better protected you are against rising interest rates. Ten to fifteen years is typical. Furthermore, some banks allow for extra repayments to become debt-free faster. Check whether your loan includes this option.

We would be happy to support you with our network of financial advisors and banks to find the optimal financing solution for your property. Contact us for a free consultation!

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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