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According to the analysis of a mortgage broker, with Germany’s stable economic development, record low unemployment rate and continuous expansion of science and technology enterprises, the number of high-tech and high- paid populations in particularly large cities continue to grow strongly. The demand for investment and self-occupation continues to grow and the real estate market is still in short supply.
International clients who want to buy a property in Germany are often discouraged because they are unfamiliar with the process of getting a loan. The German real estate investment consulting IRIS Investments team has provided one-stop service for Chinese and international clients to invest in real estate in Germany since 2013. For many years we help many customers successfully to get a loan to buy property. According to the financial situation of each client and the property selected by the buyer, the best loan plan will be provided after a comprehensive evaluation. We also conduct free evaluations for properties which have already been fully paid or for which a value-added range is obvious, and used as fund for the next property investments.
Here are four different types of loan cases for reference:
  1. How does an investor who works in China get a loan from a German bank?
  2. How can a foreigner who does not have a permanent EU residence permit and works in Germany obtain loans?
  3. How do Chinese students in Germany get a loan to buy a property?
  4. How to apply for the loan to invest in a second property?

First case

How can an investor who works in China get a loan from German banks?
Mr Y lives in China and wants to invest two properties in Germany. After choosing the property, Mr Y came to us to apply for a loan.
Mr Y works in Beijing and has a monthly income of 70,000 Yuan after tax. Mr Y wants to buy two properties for more than one million Euros and wants to borrow 70% of the property price. After our preliminary assessment, Mr Y should be eligible for the loan, so we began to assist Mr. Y to fill out the loan application form and collect all his application documents:
The English version of the employment certificate must indicate the position, income after-tax and so on.
Proof of a German bank account. (Mr. Y must have his own account in Germany) Proof of funds, which proofs that Mr. Y is able to pay 30% down payment + 6% real estate purchase tax + 2% lawyer’s notarization fee and land office registration fee
filled out and signed loan application form
After collecting the application documents of Mr Y, we submitted the loan application to the bank. Two days later, the bank passed the review of Mr Y’s documents, and notified us that they had commissioned a real estate appraiser to assess the value of the property.
After two weeks, the bank got the appraiser’s assessment result and gave a letter of intent, which was 70% of the property price. After Mr. Y has signed the letter, the bank gave a formal loan contract within 4 working days.

Second case

How can a foreigner who do not have a permanent EU residence permit and work in Germany obtain a loan?
Mr X was sent to Germany by a Chinese company two years ago to work, and he does not have a long-term residence. His after-tax income in Germany has reached more than 7,000€ monthly.
Mr X wants to buy two properties in Berlin as an investment. The value of the two properties adds up to about 700,000€.
Because Mr X can provide a proof of a German payroll, we can help him apply for a more favorable interest rate. For customers who have lived and worked in China for a long time, the loan interest rate will be higher than for customers who work in Germany.
The documents that need to be submitted for a German loan are:
  1. Passport & residence card certificate
  2. Payroll for the past three months
  3. Last year’s tax filing records
  4. Proof of own funds in German account
  5. filled out an signed Bank’s self-financial statement form
After collecting all the documents of Mr X, we began to apply for a loan from the bank. The bank asked some more detailed questions about Mr X’s economic situation. After that, we supplemented some additional documents about the specific financial situation. Following that the bank approved Mr X’s loan application. The bank also required a personal interview with the applicant. It can be sheduled before signing the loan contract or can be combined with the signature of the contract at the bank. Only one personal appointement is necessesary and the signed contract can be sent to the bank if the interview took place beforehand. Mr. X chose to partake the interview after completing
the contract, signed it after the interview at the bank and completed the loan process.

Third case

How do Chinese students in Germany borrow money to buy a property?
Mrs X and Mrs Y are mother and daughter. Mrs X is an executive of a company in Beijing with an annual salary of approximately 1.2 million RMB after tax. Mrs Y studies in Germany and has not graduated yet.
Mrs X wants to buy an apartment for her daughter. Mrs X first considered of whether to buy a new apartment or a pre-owned apartment. We told her that because she uses Chinese income to borrow money, the maximum loan amount for a new property is 70% of the property price; for a second-hand property whose price is less than 250,000€, the maximum loan amount is 54% of the property price. If the property price is higher than 250,000€, it also could be financed up to 70%.
In addition, since Mrs X does not have a bank account in Germany, we suggest that Mrs Y can be the second borrower for co-loan, so that Mrs X can directly use Mrs Y’s bank account to repay the money, eliminating the need for Mrs X to open an account in Germany. Because if the buyer wants to take a loan in Germany, he must have a German bank account for repayment, and most banks in Germany can only open accounts for people who have a permanent address (registered for settlement) in Germany. In this case we recommend using an already existing German bank account to save time.
In the end, Mrs X chose a new property which worth about 450,000€. Mrs X and Mrs Y acted as lenders at the same time and got 70% of the loan.

Fourth case

How to apply and operate a loan for the second property investment ?
Mr X and Mrs Y are a couple, they live together in Germany. Mr X is an executive of a company and his after-tax income is about 6.000€ per month. Mrs Y is an employee and earns about 2.000€ per month after tax.
Last year, Mr X and Mrs Y wanted to buy a property worth about 550.000€ in Frankfurt for their own use. After communication with the loan bank, they obtained successfully a loan of 495.000€ (90% of the house price) and successfully bought a property.
Earlier this year, Mr X and Mrs Y wanted to buy a small apartment in Berlin as an investment. The apartment´s price is about 370.000€.
Due to bank regulations, the maximum loan amount for each person is about 100 times the net salary. Therefore, Mr X and Mrs Y have a total loan amount of approximately 800.000€. That means, they can also loan another 300.000€ together.
After paying 70.000 euro, Mr X and Mrs Y borrowed another 300,000 euros from the bank (81% of the property price), and successfully bought the second property.

Fifth case

Similar to Mr X and Ms Y, there is also a Mr Z from Shanghai. Mr Z’s monthly after-tax income is approximately 50,000 RMB . Mr Z bought a property in Berlin for investment in 2018. The property price is about 330.000€. He borrowed 70% of the property price through us and bought the property successfully. This year, Mr Z’s first property was successfully rent to a German tenant. Mr Z wanted to buy another property as an investment, whose price is about 390.000€. We helped Mr Z to apply for a 70% loan, allowing Mr. Z to successfully purchase his second property.
The above cases are very common cases among thousand cases. Each (can be two loan applicants) client’s occupation, income, household expenses, including who is the employer, tax status, personal financial status and property status will affect the final conditions of the loan. Properties with loans can also be resold. If the position and income changes, the buyer can also apply to the bank for individual solutions.
While optimizing the process and increasing financial leverage to maximize benefits, it is also necessary to avoid unnecessary risks. If the loan amount is high and the risk of the work also high, we guide you through additional offers such as an insurance for your loan. With our consultation we provide the best individual strategy for your investment.
Thank you for reading this article. For details about properties and loans please contact us.