Land charge (Grundschuld)

A Grundschuld (land charge) is a lien on a property that is entered in the land register and serves the bank as security for your loan.

Land charge vs. mortgage:

• Mortgage (Hypothek): tied to the loan. Loan repaid → the mortgage expires automatically
• Land charge (Grundschuld): NOT tied to the loan. Loan repaid → the land charge remains
• In practice, land charges are used almost exclusively today (more flexible)

Why a land charge instead of a mortgage?

• Reusable: after repayment, the same land charge can be used for a new loan (modernisation, new loan)
• Switching banks: the land charge can be transferred to a new bank by assignment – saves notary costs

Costs:

• Registration: approx. 0.8–1.0% of the land charge amount (notary + land registry)
• With a €300,000 land charge: approx. €2,400–3,000
• Deletion: approx. 0.2–0.4% (notary + land registry)

After repayment: delete it or leave it?

• Leave it: costs nothing, can be used for later loans
• Delete it: makes sense when selling (the buyer wants an unencumbered land register)
• After repayment you receive a deletion approval from the bank

Ranking in the land register:

First rank = the bank that gets its money first in a foreclosure auction. That's why banks always demand 1st rank for mortgages.