Mortgage financing

A mortgage (Baufinanzierung) is an earmarked loan for buying or building a property – the biggest financial decision in most people's lives.

Current terms in Germany (2025/2026):

• 10 years fixed: 3.3–3.8% effective rate
• 15 years fixed: 3.5–4.0%
• 20 years fixed: 3.7–4.2%
• Average loan amount: approx. €322,000 (Bavaria: €387,000, Saarland: €233,000)

What you need:

• Equity: at least 20% of the purchase price + purchase costs (10–15%)
• Monthly instalment: max. 35% of net household income
• Permanent employment contract: almost always required

Important adjustment screws:

1. Initial repayment rate:

• At least 2%, better 3% (shortens the term by ~8 years!)

2. Fixed-rate period:

• Currently (moderate rates): 15–20 years recommended for planning certainty
• Special right of termination after 10 years (§489 BGB) – no matter how long the fixed period

3. Special repayments:

• Agree on at least 5% per year in the contract (free at most banks)
• €10,000 special repayment/year saves over €45,000 in interest on a €300,000 loan

4. Compare:

• ALWAYS get at least 3 offers (your bank + 2 brokers such as Dr. Klein, Interhyp)
• 0.2% lower interest = approx. €10,000 savings on €300,000 over 20 years