Buying property in Germany

[morgenmorgen]

Has anyone here been through the process of buying a house/apartment in Germany? How did you find it? What made you decide to buy rather than continue renting? How much % deposit did you put down? Did you pay the buying fees outright or get a separate loan for them?

I've lived in Germany for over five years with my husband and we would like to stay here long term, at least the next 10 years. Obviously renting here is very easy and much better than in the UK, but we are concerned about our financial security in retirement and so are thinking of purchasing a property (to live in, not to rent out). However, the fees for buying are enormous and the deposit required also seems to be so much higher than what's required in the UK. Just looking for people who've gone through the same thought process and decided either way!

We have been considering it for a while (lived in Germany for 20 years) but after a recent conversation with our bank and looking closely at the local market the last couple of years we are going to hold off as prices are so high that a deposit and buying fees are ridiculous. We were told an amount they would loan us at a reasonable rate (that theoretically could be used to finance 100% of a purchase) but that was dependent on covering the buyer's fees ourselves. And with the prices the way they are in our preferred area that isn't realistic at the moment.

Have you considered building yourself? There are many schemes available through KfW to subside certain aspects of new builds, just the issue of finding a plot. But depending on where you are in the country that could be a more realistic option.

Thank you for your reply! Yes, it's really the buying fees that are the issue. We could just about save enough to cover a 15-20% deposit (although this would take several years) but saving the buying fees on top would be basically impossible for us to do in a reasonable timeframe. Where we live a 3-Zimmer apartment in a decent area would be 500k plus 😭 So even if we had 80-100k saved for fees/deposit our mortgage payments would still be well over 2k per month. I just don't see how any first-time buyers in German cities are doing it, but I guess they must be.

We would love to build a house! Unfortunately at the moment we are living in Berlin, where finding land is probably even harder than affording a house. However we will soon be moving to Bavaria and perhaps this will be a better option then. I've heard about the kfw grants/funding but not looked into them in detail. Do you know if German mortgage brokers provide advice on these? I would definitely find it pretty intimidating to go through the building process though - I've watched a lot of Grand Designs which has maybe skewed my view of how stressful building a house is! It seems more common to go through a turnkey house building process here, but I've also heard this can be risky in case the building company goes bankrupt.

What did you end up deciding to do in the end - continue renting or building something?

You'd probably be ok if you can save either a 20% deposit or the buying fees. If you have two decent wages you should be able to get a loan to cover buying fees and then a mortgage for the rest. But you'll need to get some good advice and talk to a few different banks. Ours was honest and said we could probably get a higher loan from other banks but their interest rates would be higher and not so good terms.

I can imagine what the market is like in Berlin (we're in Frankfurt which is just crazy) but if you are moving to Bavaria (as long as it's not Munich 😅) and would be happy in a slightly more rural area you should be in a better position especially to build. I get your concerns about issues with building companies but I guess you'd have to pick one of the larger ones and pay a bit more but not have that worry.

We've decided to wait a few more years. We're happy enough in our rented house and with the shortage of building materials, rising costs and interest rates we don't think it's the best time. But I always have my eye on immobilienscout just in case 😂

As a PP says, a lot depends on area, but a few things to think of that I would add are:

If I were going to buy I would want to be very sure I could sell again when/if I needed to. The house buying/seeling market is very different here (certainly outside the big cities). One reason why we haven't bought is that selling again might well be tricky in the area we are in. Of course one could always rent a property out but in all honesty, I wouldn't want to be a landlord here.

There are going to be stringent legal requirements for energy efficiency measures in the next few years, which (certainly to me) would make buying anything older than about 10-15y a concern. This is another point in favour of building your own - there are good reasons lots of people do it in preference to buying - but land may well be at a premium, again depending on the area, and I'd want to check climate risks (forest fires/floods) very thoroughly. Also the Greens are beginning to make noises about new Einfamilienhäuser not being eco-friendly (which tbf they're mostly not).

IIWY (I see you've been considering apartments) I might be considering renting with a Genossenschaft. You buy a certain number of shares (which is usually not much more expensive than a typical Kaution) and then you have a right to live there for life. Obv you pay rent and that varies a lot, but you can always downsize within the Genossenschaft.

We bought, nearly 10 years ago, so just missed the crazy prices round here. We're also paying off pretty much all of the mortgages next year - except a pension element which runs for 15 yrs.

We had about a 15- 20% deposit.

Things to think about

1. mortgages v different to UK style, mainly run for 10yrs. But there are different types of loan available, I think we have three different products and two of those DH and I have separate ones each as some are counted a 'capital' I think like the Riesterrenter products so have a bearing on LTV

2. the contract signing is done live - read out by the Notar and signed in front of them by both parties. You get to see the contract in advance and can amend things or add notes. We had to have an official translator as my German wasn't really up to it at the time, but I knew more technical house buying terminology than they did somit seemed a bit pointless, but was necessary.

I'm happy to answer any specifics if I can help. Overall, we're pleased we bought, but are fortunate timings wise, we probably couldn't afford our house now.

We bought in B., but so long ago that our experience would probably be totally different from the situation today. For instance, we were among the last recipients of a first-time buyers grant that I think gave us around 20,000 euros over eight years. That helped hugely, obviously. And we got the deposit from an inheritance.
I do remember that our mortgage broker set us up with two parallel mortgages to take advantage of preferential KfW rates, and the rest went through BHW (we hated that company with a vengeance - but it helped convince us to pay the mortgage off early. The BHW had clearly never experienced this before and made a massive fuss, but we insisted).
So yeah, it was all a bit complex, but OTOH we haven’t bought in the UK before so have nothing to compare it with.
I was also in total ignorance about the rise in property prices until about a month ago, and am now gobsmacked at how they‘ve shot through the (well insulated) roof. No way could we have bought even a cubby hole these days! I‘m assuming that all purchasers these days either have a bloody good job in tech or finance, or have inherited. So good luck with it all.

Yes, I think that's what we would have to do (the loan for the Kaufnebenkosten). I suppose that then comes back to my original question - which I'm aware nobody can answer for me! It just seems like in the UK buying is so much easier and less expensive, it makes the decision easy. While here it would mean putting all of our savings into it plus significantly increasing our cost of living, to live in a place that is probably much less nice than what we currently rent. It's a hard decision I think. I do know a lot of people here who own, but they are mostly a bit older than me and either bought 10+ years ago or are quite high earners (or both).

I think you're right that we probably need to speak to our bank or a mortgage broker just to get a better idea of things, even though we are still some way off having savings in the amounts I quoted previously!

Oh yes, I know the regular Immobilienscout scrolling well 😅 And no not Munich, I would love to live there but sadly even renting there is insanely expensive now.

Thanks for your reply! Good point about reselling. In Berlin I don't think it would be such an issue but where we are moving it could be. It seems like people stay much longer in the houses/apartments they buy here, but we would probably want the option of being able to upsize in future or even leave Germany completely. And absolutely agree on being a landlord in Germany, I certainly don't want to do that.

I hadn't heard of Genossenschaft, will look into them. Ideally we would live in a house (although a Reihenhaus or Doppelhaushälfte would be fine - and probably more within our reach than an EFH) as we have pets/kids to consider, but an apartment might be more realistic. And it sounds like it would solve the problem of my panicking about how we are going to afford to live in retirement. Will do some research, thanks.

Thanks for replying! Yeah, I wish I had somehow scraped together the cash to buy when I first moved here - although prices were high then they were nothing compared to now. It's interesting what you say about a 10-year term being the norm, I wonder if that still holds true given today's prices. I can't see it being possible unless someone had a massive deposit.

I'd never heard of Riesterrente! This thread is giving me plenty to research, which is great. I had a quick read of an article online and it seems like a kind of Altersvorsorge for buying a property where you get similar tax advantages to paying into a pension plus some subsidies for having children - is that correct?

Oh and yes, we had a similar experience when notarising our will - the live speed read! But I guess the advantage of the system is that things seem to move relatively quickly here, at least that seems the case based on friends of ours who've bought lately.

When I bought, in 2002 the general rule of thumb was that you needed 33% "deposit" (which included your estate agent's fees and the legal costs) plus guarantees as long as your arm.
In fact I ended up borrowing more than the actual cost plus fees. The buying process was very straightforward. Saw house online, did 2 viewings, put in an offer, which was accepted immediately. Went and signed the contract about 2 or 3 weeks later.
House paid off long ago. Do not remember much about the financing, except that the estate agent put me in touch with someone who sorted the mortgage.
Many people here, particularly those, who live in larger towns and cities, buy a house and rent it out whilst continuing to live in their city flats.

We are outside Frankfurt and bought ours about 3 years ago. We were lucky that the sale of our UK house went through pretty quickly and we therefore had some spare cash for the fees and tax and whatever. It was a ridiculous amount of money (especially the estate agents fees...).
As far as I'm aware, our mortgage is fixed for 25 years. We can get out earlier but would have to pay extra. It's been done through our Sparkasse and they were really helpful.
On the other hand, our property has increased in value since we bought it. It's worth about double what we paid for it now. However, we've spent quite a bit on improvements, including a new heating system. (We do have gas central heating now but the house was built in the 1940s and is generally well insulated.)
The paperwork here drives me nuts. We need to sort out further work on the building to get it ready for winter. Trying to get an architect is close to impossible.

some great replies here - I bought in Germany 6 mo ago. Bloody expensive esp estate agent costs. I used Interhyp for the mortgage and have to say they were brilliant and helpful. Think the market will probably rise more, I noticed that Germans buy once, for life, they don't have the concept of the housing ladder. So it's your one dream home forever or nothing. Also you have to keep it for 10 years or pay capital gains. don't know if it was a good decision to buy but on balance seemed ridiculous to fork out rent for years and figure I could rent it out if I needed (rental market is also very healthy)