Property Purchase Costs | Mortgage Finance

There are two main options for UK investors:

• Raise finance on your existing property in the UK – Using the equity in an existing property is a common way to raise the necessary capital and allow you to pay for your new property in cash, avoiding the need for a local mortgage.
• Secure a mortgage against the new property from a local bank – This can be a wise option, especially if the interest rate is lower than the current UK interest rate. However, you will need to give some thought to how you will service your mortgage payments each month, especially if you are not living or earning in that country, as you may well lose out on regular currency exchange charges.

One of the features of the German mortgage system is that a comparatively high deposit is usually required. Many German buyers are now getting around this requirement by taking both a mortgage and a loan to fund the deposit. Some lenders may also require you to show that you have previously been a reliable saver, though requirements do vary.

 Typical terms for a German mortgage are:

•  Loan value – 60-70% of property's value
• Loan term – 30 years/until retirement age
• Interest rate – Fixed
• Repayment type – Repayment only (no interest-only option)
• Maximum loan amount – Approximately 3x income

Rental income

German lenders will lend to investment buyers based on potential rental income, but expect very carefully-assessed estimations. Buyers looking for a holiday home that will be let out some of the time may find they are only eligible under residential mortgage terms, i.e. without considering rental income.

Documents needed – general

The documents you will need to submit vary from lender to lender, but as a rule, you will have to supply at least the following:

• Copy of passport and proof of permanent address.
• Certificate of marital status (wedding or divorce certificate) if applicable.
• Bank statements from the last six months.
• Payslips from the last three months and a referral letter from your employer.
• Referral letter from your bank.
• Two most recent P60 tax declarations.

Self employed applicants will also be required to supply copies of their most recent tax return. Documents need to be legalized according to your country’s official procedure.

Documents needed - property

The property documents required (from your agent) are as follows:

• Title deeds.
• Preliminary contract.
• Document showing the taxation value of the property.
• Certificate showing the property is free of any encumbrances
  

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