Buying Property in Germany: Mortgages (Baufinanzierung), Notary & Purchase Tax Guide

Buying a home or investment property in Germany is an attractive option for long-term expat residents seeking security and capital growth. Germany has no legal restrictions on non-EU foreign citizens buying real estate.

However, ancillary acquisition costs (Kaufnebenkosten) can add between 10% and 15% to the purchase price.

Here is a complete breakdown of the home buying process, mortgage financing (Baufinanzierung), notary procedures, and taxes in Germany.

Ancillary Property Purchase Costs (Kaufnebenkosten)

When budgeting for property, you must pay several statutory fees on top of the agreed purchase price (Kaufpreis):

  1. Property Transfer Tax (Grunderwerbsteuer): Varies by federal state, ranging from 3.5% to 6.5%:
    • Bavaria: 3.5%
    • Baden-Württemberg, Hamburg: 5.0%
    • Berlin, Hesse: 6.0%
    • North Rhine-Westphalia, Brandenburg: 6.5%
  2. Notary & Land Registry Fees (Notar- und Grundbuchkosten): Approximately 1.5% to 2.0% of the purchase price.
  3. Real Estate Agent Commission (Maklerprovision): Capped by federal law at a maximum of 3.57% (incl. VAT) paid by the buyer (with the seller paying an equal matching 3.57%).

Rule of Thumb: Plan to cover the ~10%–12% ancillary costs out of your cash savings (Eigenkapital), as banks usually only finance the core property purchase price.

Securing a German Mortgage (Baufinanzierung)

German banks offer competitive mortgage loans to foreign buyers holding residence permits or EU passports.

Equity Requirements (Eigenkapital)

  • Expats with Permanent Residency (Niederlassungserlaubnis): Can secure up to 90%–100% financing, requiring only 10% cash equity to cover ancillary purchase fees.
  • Expats on Blue Card / Work Visas: Banks typically require 15% to 20% equity.
  • Non-Resident Foreign Investors: Banks require 30% to 40% equity.

Interest Rate Lock Periods (Zinsbindung)

German mortgages allow you to fix your mortgage interest rate for long terms (typically 10, 15, or 20 years), providing complete payment predictability.

Step-by-Step Purchase Workflow

  1. Mortgage Pre-Approval (Finanzierungsbestätigung): Work with a mortgage broker (Interhyp, Baufi24) or bank to get an official pre-approval letter.
  2. Make a Formal Offer & Reservation: Sign a reservation agreement with the seller/agent.
  3. Draft Purchase Contract (Kaufvertragsentwurf): The notary prepares the neutral legal sales contract (Kaufvertrag).
  4. Notary Signing Appointment (Notartermin): Both buyer and seller meet at the notary’s office. The notary reads out the entire contract line by line.
  5. Priority Notice (Vormerkung im Grundbuch): The notary places a legal reservation notice in the Land Registry (Grundbuch) to prevent the seller from re-selling the home.
  6. Payment & Key Transfer (Fälligkeitsmitteilung): Once the notary confirms all conditions, you transfer the funds via your German bank account and receive the keys!

Protecting your new home against legal disputes? Explore our guide to Legal Expense Insurance (Rechtsschutzversicherung)!