German Real Estate financing can be done either with mortgage banks or with any usual bank or financing institute (Sparkasse, Volksbank, Insurance company, Bausparkasse). Financing usually is done for about 80% of the buying price by mortgage loan. Anything above that up to 100% of the buying price needs to be secured either by additional securities like insurance (with actually that exact value) or other financial securities that have to be deposited at the financing bank. It can sometimes be done based on the income of the person or company alone buying but that case is very rare as of today.
Financing foreigners not resident in Germany and not earning their money in Germany is possible under certain circumstances but cannot be expected to exceed 50% of the buying price. For this you might need a good and independent financing broker; we can recommend some if you should be interested.
Financing should be secured before any contract of purchase is signed. Sometimes one can sign a reservation which holds good for an agreed-upon period of time, enough time to get the financing secured. However, the only binding document is the purchase deed.
Read part five and the rest of this series by following the links below. Use the Feedback form (at the end of each webpage) to send us your questions or feedback.
How to buy Real Estate in Germany Part 1: The current property market situation
How to buy Real Estate in Germany Part 2: Market view by Real Estate category
How to buy Real Estate in Germany Part 3: Steps to take when buying
How to buy Real Estate in Germany Part 4: Financing property in Germany (this page)
How to buy Real Estate in Germany Part 5: Frequently asked Questions