Engel & Völkers Germany > Blog > Financing options for the purchase of a house in Germany

Financing options for the purchase of a house in Germany

From dreaming of your own house to owning your dream house - as soon as you have made the decision to buy a property or build a new house, you will find yourself confronted with the question: How do I finance my dream house? It does not matter whether it is the purchase of a owner-occupied house, an apartment building or a villa; our real estate agents from Engel & Völkers Germany will show you which of the many financing options is most suitable for you.


Financing models in the context of buying a house with your real estate agent

To help you find your way around financing options, we present a few models that you can choose from when buying houses and villas in Germany.

The agreement of a fixed interest rate as well as a suitable percentage repayment amount for a fixed period - for example 10, 15 or 20 years - define the monthly rate of your loan in the context of an annuity loan. The higher the repayment contribution over the entire term of the loan, the lower the interest burden and the smaller the remaining loan amount at the end of the agreed term. After the agreed term - important in the case of a low interest rate at the beginning - the remaining debt will be refinanced. You can of course also pay the remaining amount if you have the necessary financial resources to expire the fixed interest rate. In a phase of low interest rates, a high repayment share is advisable, because after the fixed interest rate on your real estate financing has expired, you could feel anxious about the higher market interest rates. Our recommendation: When buying your house or villa, think about follow-up financing in good time.


The building loan contract model is offered in three variants:

In the first variant, a building loan contract agreement is concluded. You finance this contract with a loan that only accrues monthly interest. The home loan and savings contract is pre-financed with this loan. If you save 1% of the loan amount annually in the home loan and savings contract, it will take 30 years for the home loan to be allocated. However, since the loan interest is agreed for a specific term, the interest charge could increase after the commitment expires if the loan agreement was concluded in a phase of low interest rates.

In the second variant, a higher loan amount is taken out than is required for the house purchase. The “surplus” is then paid into the home loan and savings contract and saved with additional monthly savings in order to reduce the repayment amount. At the end of the loan term, the loan for your house is repaid with the building loan contract agreement. The special thing about this contract variant is that the total monthly rate is calculated in such a way that it remains constant over the entire term.

in the third variant, a loan is taken out to purchase or build a house, several building society contracts are concluded at the same time with different allocation dates and different monthly savings amounts are agreed upon for each building society contract. Part of the original loan is repaid with each grant. Here, too, higher market interest rates can become a problem.

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Maturity loans, stock loans, mortgage loans: alternatives for financing your purchase in Germany

Financing a house using the maturity loan, or also called bullet loan financing, a loan agreement and a separate savings agreement are concluded for a period of, for example, 30 years. In order to make repayment of the loan possible, the forecast of the necessary annual return depends on which funds, securities, capital insurance and similar investment models you choose. The loan amount remains unchanged until the end of the savings contract and over the entire term and is paid in one fell swoop while you build up the necessary credit through the savings contract. With bullet loan financing, many unknown variables come together, such as negative share prices, one or more stock market crashes and failure to achieve the fund subscription objectives. According to the experience of our real estate experts at Engel & Völkers Germany, bullet loans have proven to be too expensive in the past - at least more expensive than annuity loans.


Another variant of bullet loan financing is the stock loan. You get a repayment-free loan and undertake to pay into a stock fund for the agreed term. A stock loan is risky, but it can also hold opportunities if the share price rises.


With a mortgage loan, the owner of a property and the lender enter into an agreement. The bank secures one or more houses corresponding to at least the value of the loan. This means that there is a mortgage on the property, which is entered in the land register, until the loan is repaid. The general conditions for the payment of interest and amortization result from the choice of a financing model that is accepted by both sides.


In addition, the Kreditanstalt für Wiederaufbau (KfW) provides low-interest capital in its funding programs as part of the KfW funding programs to support you with financing, modernization, energy saving or the barrier-free renovation of your property.


Whether you decide to buy a house or a villa in Germany: Our experienced real estate agents from Engel & Völkers Germany are at your side to advise you and help you to find the most favorable financing model for you. You can find more detailed information on buying a house and financing options on our blog.You are also welcome to contact our team of experts for a consultation. We look forward to your questions!

You can currently buy the following houses in Germany

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