Financing purchase costs in Germany
Financing the purchase costs is not what a standard mortgage does. The German consumer advice centre (Verbraucherzentrale) says buyers should bring 20 to 30 percent of the purchase price, plus the purchase costs, from their own money. Those costs are the transfer tax, the notary, the land register, and, when an agent is involved, the buyer's share.
The bank looks at the price, the income, and the value the apartment can support over the life of the loan. The purchase costs are not inside that value. Whether a bank will lend more in one file is its own decision. This guide is not a loan offer and not tax advice.
What the bank finances
A property loan is a loan secured by the apartment. For Pfandbrief banks, the value used for that security is the lending value (Beleihungswert). Section 3 of the Lending Value Regulation (BelWertV) defines it as the value that can be expected over the whole term of the loan, without short-term market swings and without speculative elements. It is not the purchase price, and it is not the purchase costs.
How the monthly payment, the fixed-rate period, and the equity fit the apartment is in mortgage financing in Berlin.
What has to stay equity
In Berlin the transfer tax is 6 percent of the consideration, in practice usually the purchase price. That rate applies to transactions from 1 January 2014. The Senate Department of Finance states the rate. On a price of 400,000 euros the tax is 24,000 euros. There is no tax-free allowance. If the consideration is above 2,500 euros, the tax is charged on the whole amount. Buyer and seller both owe the tax. The contract usually says the buyer pays.
The tax has to be paid before the buyer is entered in the land register. After payment, the tax office issues a clearance certificate and sends it to the notary. Without that certificate the land register does not record the transfer. The Senate Department explains this on its page buying and selling property. The money has to be ready when the assessment arrives, not after moving in.
Notary and land-register fees follow the Court and Notary Costs Act. The statute does not set one flat percentage. The fee depends on the deed, the land-register applications, and the transaction value. The worked Berlin example is in the cost of buying property in Berlin. The same reckoning, with the rate of the state where the property sits, is in the purchase-costs calculator.
When an agent is involved and the buyer is a consumer, the buyer pays no more than half of the agent's fee. If both sides appoint the agent, both must commit to the same amount. That rule is section 656c of the Civil Code (BGB). If only one side appointed the agent, that side must remain liable for at least the same amount. That is section 656d BGB. The percentage itself is agreed. It is not a statutory fee on every contract.
How buyers close the gap
The first route is the buyer's own money. Savings, securities, and building-society balances count. Leaving them invested means borrowing more. How 20 and 30 percent work on a Berlin purchase price is in the down payment for buying an apartment.
A gift from the family can fill the gap when the money belongs to the buyer and is not owed back to a bank. Where German gift tax applies without limit, a child can receive 400,000 euros tax free, and a spouse or civil partner 500,000 euros. That is section 16 of the Inheritance and Gift Tax Act. Gifts from the same person within ten years are added together. Whether one gift stays tax free is a question for a tax adviser. A loan from the family is another debt. The bank decides whether it counts as equity.
Another property can give the bank extra security. That too is the bank's decision, not a right. A loan that also covers the purchase costs sits above the value the apartment secures over the long term. The Verbraucherzentrale describes what little equity means: a higher interest rate, a longer time to clear the debt, and the risk that a sale before the fixed rate ends leaves debt behind.
FAQ
Will the bank finance the transfer tax?
Usually no. In Berlin that tax is 6 percent of the consideration, and that amount stays equity.
Can a bank still include the purchase costs?
Some will look at it. It is a larger loan, not a legal right. The apartment secures the lending value, not the tax and not the notary's bill.
Is 20 percent of the price enough?
No. The consumer advice centre calls for 20 to 30 percent of the price plus the purchase costs. Twenty percent of the price alone does not cover tax, notary, and agent.
Does this replace a loan offer?
No. The bank decides the loan. Tax and gifts stay with an adviser.
Next step with Sweet Home Berlin
When an apartment is on the shortlist, we set the price and the purchase costs against the equity before the monthly payment is the only number in the room.