How to get a home loan / private loan in Germany?

Gettin a home loan as an expat in Germany

Germany is one of the most developed economies of Europe and an international economic powerhouse. Expats who come here might want to settle down for the foreseeable future. That’s the time when expats ask: How do I get a home loan in Germany?

While English is extensively spoken and understood here, the place has innumerable wonderful opportunities for those who are talented and willing to shine. Further, the local people and the government of the country are pro-migrant.

No wonder, Germany draws migrants from far and wide, through the year. Perhaps, you are also planning to move to the hotspot and settle there in, right? You will need a car and a house if you have such plans. But since these will cost you money which perhaps you may not have, you will have to seek and get a loan.

The good news is that even as an expat, you can successfully apply for a loan in Germany and get it too. You will have to fulfil certain requirements for the purpose.  

Not many people in Germany manage to buy a house or a flat for one reason or the other. Maybe, this is one reason why Germany is more property-rental than a property-owning nation. This does not mean though you shouldn’t think of having a house of your own.

Obtaining a Loan in Germany

Buying a car, a house or an apartment, or refinancing previous loans are the three most popular reasons people in Germany get a loan.

Now the process!

Before you begin looking for a home, meet with a mortgage provider (e.g. over at our partner: Ghar In Germany) to determine whether you qualify for a mortgage or a government homeownership loan and, if so, what your budget will be.

Mortgages in Germany can be obtained directly from a German bank or through an intermediary such as a mortgage broker. Both will provide free consultations to give you an idea of the procedure and expenses.  While German banks offer a straight route to a mortgage, brokers give individualised advice and shop around for the best mortgage deal. Many English-speaking mortgage brokers in Germany cater particularly to foreigners. Ghar in Germany caters to expats and has extensive experience in the real estate business.

Afterwards, fill out the application form meant for the purpose. The form will seek primary details, including your name, address, and contact information. It will also seek the particulars involving your income and employment position. The bank will utilize the information to know if you are eligible for the loan you want.

Besides, the bank may also ask you to furnish evidence of your identity and your income. For this, you may have to furnish copies of your passport besides wage slips from your firm. If you are self-employed, you may have to furnish copies of your business registration documents and tax returns.

The bank or the financial institution may seek some more data and information on the basis of the type of loan you could be interested in.

How successful your application for the loan would also depend on your resident position. If you are still not a permanent resident, you will be put in a higher risk category of paying the loan back in full. So, to boost your chances of getting a loan in Germany, as a migrant, seek loans that have a repayment period that lies fully inside the period of your residence permit. In case you are looking at getting a mortgage, your best chance is to cool your heels until you get a settlement permit.

How to get Private/Home loans in Germany?

Some Q&A

How easy it’s to get a personal loan in Germany?

As a migrant, you can get a personal loan in Germany involving German mortgages provided you fulfil the terms and conditions as laid down by your lending bank.

Before you apply for a loan, make certain that you meet these minimum requirements to get credit:

  1. Be a minimum of 18 years old.
  1. Have residency status in Germany. Blue Card, permanent residency (Niederlassungserlaubnis), and EU citizenship doesn’t really matter. For each, there are specialized banks available.
  2. Have a German bank account.
  3. Have a fixed income. If you are a salaried employee, you need to produce 3 months of pay slips; and if you are a freelancer, you will need to produce up to two years of balance sheets.
  4. How can I boost my chances of obtaining a loan in Germany, as an expat?

To multiply your chances of getting a loan in the overseas hotspot, as a migrant, only ask for loans that have a repayment period plan that lies completely inside the time frame of your officially approved residence permit. In case you are looking at obtaining a mortgage, your best chance is to cool your heels until you have a settlement permit.

What’s the amount that I require for a down payment on a house?

You should have a minimum of between 10 and 20% of the purchase price.

What is a Credit Score, and why is it so important?

Your credit score (SCHUFA) is essentially a number that reveals how creditworthy you are. The score is based on your credit record and it reveals how great the chances of you repaying back the loan taken on time are, and helps the lenders decide if or not to give you the loan, and at what specific interest rate.

A decent credit score is compulsory as it provides you with access to much better terms & conditions and rates. This isn’t to suggest if your credit score isn’t good, you won’t get a loan, as you may still. However, the terms & conditions, in such a case, won’t be good. Late payments, defaults, not to mention bankruptcies won’t help; these may impact your credit scores. Your credit score will be higher in case your credit record is good.

What Credit Score do I need to obtain a loan?

The German system for credit scoring is totally different apart from what one sees in other countries. Here, the chief credit rating agencies use the statistics from your credit report to work out your credit score. Your credit score could vary from 100 to 600. If you have a credit score somewhere between 100 and 199, it will be considered good. If you have a credit score of more than 300, it will be considered poor. You can order your credit report, here on the official website of Schufa

Final Thoughts

As a migrant in Germany, you can apply and get a loan for your house or car, provided you fulfil the various terms & conditions laid down by the lending bank. If you have a good credit score and are a resident of the nation, you would have a decent chance of getting a loan here. The best is to get in contact with a mortgage/loan broker to get the best deal possible AND at the same time get the process as well as the terms&conditions explained by a professional. You can contact Ghar In Germany here: Link.

Leave a Reply
You May Also Like
handing money
Read More

Money Transfer to and from Germany

If you are moving to Germany you might want to send money home to your loved ones or to invest in property in your home country. No matter whether it’s a one-time payment to buy a plot or a recurring payment towards your pension fund or the EMI of your apartment back home. Whenever you are transferring money, you’ll need to check multiple factors in order to get the most out of your hard earned money.

Exclusive Offer Transfer money from India to Germany
Read More

Exclusive Offer on Money Transfer from India to Germany

Sending money from one country to another can be complex and worrisome, especially for parents with children studying abroad. Indian parents often need a robust and secure money transfer service when their children are studying in Germany. The financial support provided by parents plays a crucial role in ensuring a smooth learning experience for their kids.

convert to German drivers license
Read More

Converting your driver’s license in Germany

Looking to obtain a German driver’s license by converting your foreign one? It might seem intimidating but don't fret; our ultimate guide will help simplify things for you! With our step-by-step guide outlined here along with helpful tips based on expert insights- making the switch will become easy peasy!

Moovik
Read More

Moving made easy in Germany

Moving can be an exciting milestone in life, but it can also be stressful and overwhelming without proper planning. That's where Moovick comes in - an all-in-one app that offers on-demand, professional relocation and home improvement services across all EU countries. Whether you're moving down the street or across the continent, Moovick has got you covered.