German Mortgage Calculator
This German Mortgage calculator helps you understand how fast you should pay back your mortgage. One of the key decisions for your mortgage is choosing how quickly to repay your mortgage.
This mortgage repayment calculator helps you understand how this repayment works, what choices you have and how to choose among these options.
We also tell you where to find answers to the other essential questions about the size and nature of your mortgage—how long to fix your rate for, and how much to pay down.
What are the three key steps in the German Mortgage process?
- The first step in the mortgage process is to understand how much house it makes sense to buy in the rent or buy calculator.
- The second and related step is to see if and how much the banks are actually willing to lend to you for your dream home in our affordability calculator.
- The third step is to make a decision about the type of mortgage, notably the speed of repayment, and your fixed interest period.
This mortgage calculator and article helps you with the third step. If you’d like to skip this explanation? Then use our optimal mortgage decision questionnaire. After you finish the questionnaire, you can get your personalized advisory report with the recommendations you need.
Let’s start by making it concrete and personalising the question of repaying to your situation:
Your monthly repayment rate: NaN | Remaining loan balance after 10 years: NaN |
Total purchase fees: NaN | Interest rate: NaN |
What choices do I have for my mortgage repayment rate and how should I look at my results?
In Germany (and this is quite unique in the world) you can choose your mortgage repayment rate, called Tilgung. Some banks offer a repayment rate as low as 1%, but most banks have a minimum rate of 2%. German lenders do not offer interest-only mortgages that are popular in some other countries.
The good news is that virtually no bank charges you a different interest rate if you choose a different repayment rate. Keep in mind, though, that your choice of repayment rate may change the number of banks that are willing to work with you and hence the lowest rate available.
What are the purchase fees in Berlin?
Purchase fees: | Commission-free property: NaN | Full commission property: NaN |
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What are the three key things to know about your repayment to make your choice for your mortgage repayment in Germany?
First it is key to understand that the repayment rate has a very large impact on your monthly payments. So for most people the budget they have available is the key driver in choosing their mortgage repayment rate.
Example: At an interest rate of 1 percent, and a repayment rate of 1 percent you pay 2% of your mortgage annually, or NaN per month. With the same interest rate of 1 percent and a tilgung of 3 percent you double your monthly payment to NaN per month. If your desired monthly payment is NaN, your tilgung could be a has as NaN
The second key aspect to understand is how quick or slow you pay off your loan with a given repayment rate. For many people it is important to repay most if not all of their mortgage by the time they plan to retire. So if you are 30 this maybe for example in 35-40 years.
This table gives you an idea of the repayment rate you need to repay your loan at a given age. Your age is NaN:
Tilgung / repayment rate Repaid at age Table 3: Age at which mortgage is fully repaid. This table shows the tilgung needed to repay 70% of your loan.
Tilgung / repayment rate Repaid at age Table 4: Age at which mortgage is 70% repaid In most countries other than Germany you have little choice and have to repay your mortgage in 30 years. To achieve the same result in Germany requires having a repayment rate of about 3%.
By borrowing NaN today and choosing a NaN repayment, you would be done repaying in NaN years at age NaN and would have a loan balance of NaN after NaN years and NaN at age 67.
The third key item to understand is how the repayment rate affects your loan balance when you hit the end of the fixed interest period. Why does it matter? If your loan balance is still high and the interest rate is much higher you may get payment problems. You may get financially squeezed down the road or even lose your home. The good news is that banks closely look at this risk, and so do our advisors. We have developed special tools for this, and our recommendation engine focuses on helping you avoid this problem.
Example: At an interest rate of 1 percent, a fixed interest period of NaN years, and a repayment of 1 percent your pay NaN of your mortgage annually, and have a loan balance of NaN. With the same interest rate of 1 percent and a tilgung of NaN your loan balance declines to NaN.
Use the graph above to see your repayment forecast.
For further help or a formal mortgage offer we urge you to use our online questionnaire to see what you qualify for and which mortgage product we recommend for you. We can then explain and firm this advice in a personal consultation:
Your monthly income, the years to your retirement and your repayment risk are the key elements you need to consider to determine your mortgage repayment rate.
In the rest of this article we explain a few more elements related to the repayment you may want to know.
What’s the minimum repayment rate in Germany?
The lowest possible repayment with a few selected German lenders can be as low as 1%. There are generally no interest-only loans in Germany. A low repayment comes with consequences, for example a high refinancing risk.
How is my German mortgage rate calculated?
In Germany, the majority of mortgages are so-called annuity mortgages. An annuity is a loan with a fixed annual payment, in other words the same monthly payment.
Mortgage payments are composed of two parts, the principal or the amount you pay back and the interest, the cost of borrowing the loan.
For example, having an interest rate of NaN and a repayment rate of NaN yield an annual payment of NaN. Given a loan amount of NaN, this implies you pay NaN annually, or NaN per month. Of this amount NaN is actually the repayment, which reduces your loan and hence is like a saving.
It’s worth noting that as you pay back, while your monthly rate of NaN remains constant till the end of the fixed period, your principal increases as the interest on your loan decreases. See the amortization table above.
Can I make extra payments and is that penalty free?
Yes in Germany you can make extra payments to pay-off your mortgage faster. Most banks allow you to make payments up to 5% of your initial loan amount without paying a penalty. If this is important for you we can find products that allow for higher payments without penalties.
This so called Sondertilgung is a powerful way for you to hedge against future interest rates rising. For example, if after 5 years you see interest rates are increasing and you are worried about your refinancing risk, you can use extra repayments to reduce your remaining loan balance. Below you will see an example image:
What is refinancing risk, how do I manage it?
Refinancing risk refers to the risk that you have to refinance your remaining loan balance at the end of the fixed interest period at a higher interest rate in the future. Given that German interest rates are at historical lows, you may wonder why not lock them in for as long as possible. This is a common misconception, as the mortgage products with longer fixed interest periods also have a higher interest rate. For example, a 10-year mortgage product might have an interest rate of 1.1% whereas a 15-year product might be 1.6%.
Our engine simulates for you how important the refinancing risk is. We take into account your income growth, potential interest rate variations, and the impact of making special payments.
To help you understand
- how long to fix the interest rate for;
- how high your down payment should be and;
- how quickly to pay off your loan.
we have built a recommendation engine which takes your eligibility criteria, recommends the ideal mortgage product and then finds the best lender from over 400 lenders. To get started simply click here.