To buy or not to buy?

You are fed up of renting. You are fed up of landlords. What’s the obvious solution? Buy! Be your own landlord! Surely this will be better than being responsible to someone else and living in someone else’s property according to their rules. You decide to invest your savings (what’s the point in having money in banks these days anyway) and buy a flat in Germany. You go for a new build, which is under five years guarantee. You choose the perfect location in the centre of town, close to absolutely everything you could possibly want – the station, shops, swimming pools, schools, nurseries, play parks, etc. You decide that you want to live in it yourselves for a few years and even if after that you want to move, it will be a good investment, because 4 room flats in Heidelberg are hard to come by and very easy to rent out.

How do you go about it?

You will not find “For Sale” signs anywhere in Germany, so finding a flat to buy is generally done through an “Immobilienmakler” (estate agent). Calculate additional costs of around 10% of the “Kaufpreis” (purchase price). These costs include your agent’s commission, tax, and notary costs. Once you find something, you generally sign a “Kaufzusage” (a declaration of commitment to buy).

You then have to find a bank to give you a mortgage. My husband is responsible for all things financial in our house, so it was his task as a Spanish native to find a solution. As mentioned, it is not that easy to get a mortgage in Germany without a significant amount of “Eigenkapital” (own capital). You have to prove your value as a mortgage-taker; provide income statements for the last 3 years, show that you have an unlimited permanent employment contract, declare any assets, such as savings, pensions, as well as any debts, however small, that you have. Even the new TV I bought last week on credit? Yes, even that. By the end of the inquest, you feel like you have been strip-searched.  

I remember going to three different credit institutions; a Dutch Orange Bank and two local banks. When we signed, interest rates in Germany were at 5% - nowadays they are as low as 2.5%. Now, listen very carefully I shall say ‘zis only once – make sure you read all the small print! There was a tiny section in the Dutch Orange contract stating that they were entitled to resell our mortgage to a 3^rd party (do banks ever learn?!) And even the mortgage we signed in the end has a tiny section at the end of the contract with details about the “Vorfälligkeitsentschädigung” – the so-called prepayment penalty – designed to compensate your bank for any losses if you exit your mortgage agreement earlier than arranged. It’s such a seemingly small and insignificant section of the document as a whole that you only really realise its true significance when you inform the bank of your intention of selling. They subsequently inform you that that will be a fine of 30,000 Euros thank you very much. No exaggeration.

Anyway, once buyer and seller have agreed a price, the next step is to sign a property sales contract, ”Kaufvertrag”  in the presence of a notary;  the “Notar”. His fees are usually total around 2% of the purchase price. He reads the whole contract of sales verbatim in German. You are made to swear at the beginning that you can understand the whole document and that you therefore forego an interpreter. You are sort of lying through your teeth; at the very least your husband is. In our case, it took the Notar 2 hours to read the whole thing, so imagine how many pages it contained. By the end, you are totally exhausted and drained. You keep telling yourself it must, must be worth it. You have a brief moment of trepidation – I am actually buying a flat in Germany - do I really want to live in Germany? You then sign and the notary enters you into the land register. Done deal.  You are officially a “Wohnungseigentümer” (homeowner). You go home and celebrate with a large bottle of red wine and a strong whiskey.

Sounds easy, right? Well, we are (just about) living evidence that it can be done by non-natives. Now, with the benefit of hindsight, I think we were insane!