German Mortgages Explained

How do German mortgages work?

In Germany, just like in most places around the world, a mortgage is a formal contract between you and a lender enabling you to receive a loan to purchase a property. The mortgage defines the terms and conditions of how you will be provided with the loan and how you will pay the loan back. This will include things like, the interest rate (the amount the lender charges you for the loan), the fixed interest period (the length of time the lender will charge you this fixed interest), the repayment schedule (the amount you pay back annually).

You will want to be aware that in Germany it is hard to declare personal bankruptcy. Lenders can pursue you many years after you have stopped paying your mortgage, ie when your fortunes change. In this regard it is especially different from the US. So do make sure you can afford that mortgage.