Glossary of mortgage terms

A

• Account management fees
  DE Kontoführungsgebühren
• Amortization
  DE Amortisierung

  Paying off debt with a fixed repayment schedule in regular installments.

• Annuity
  DE Annuität

  Interest and Repayment Rate combined

• Annuity loan
  DE Annuitätendarlehen

  Most common loan in Germany. The rates of the annuity loan remain constant over the term of the loan.

• Appraisal
  DE Gutachten

  A valuation of a property. If done by a real estate appraiser they will come up with a market value based on recognized procedures. Typical fee around 1,500 – 2000.

   

B

• Borrowing need
  DE Finanzierungsbedarf

  Loan amount required based on the property costs, purchase fees and the maximum deposit

  Alternate terms: mortgage amount

• Borrowing power
  DE Kreditfähigkeit

  Maximum mortgage a bank would provide

• Building society loan
  DE Bausparvertrag

  This is essentially a home saving contract where participants of the program first pay into a common pool of money in a building society (Bausparkasse), which is a certain percentage of the required loan. Then the payments are given to people who already have a loan claim. Subsequent home savings then finance the mortgages of the predecessors. This is based on the pay-as-you-go system. You benefit from low and secure interest rate and guaranteed constant monthly installments. This program is supported by the German state.

• Buy-to-let mortgage
  DE

  It is a kind of mortgage specifically made for people who purchase the property solely for the purpose of renting it out. For tips and tricks on getting buy-to-let mortgage, please read more here.

C

• Construction lien
  DE Grundschuld

  Grundschuld

• Credit score
  DE SCHUFA

  The lenders calculate a credit score (SCHUFA) through collecting information from various public sources such as association, commercial registers, public debt directories of the local courts etc. It indicates the chance with which the loan is reliably repaid. Hence, the higher the score, the better the creditworthiness of the debtor. And borrowers with higher SCHUFA score are more likely to get lower interest rate.

   

D

• Delivery authorisation
  DE Zustellungsvollmacht

  Zustellungsvollmacht

• Deployment rate thereafter
  DE Bereitstellungszins danach

  Bereitstellungszins danach

• Deposit
  DE Anzahlung / Eigenkapital

  The deposit should at least cover all of the real estate purchase fees

   
• Down payment
  DE Anzahlung

  The amount of money the buyer is putting towards the financing. Lenders require a minimum amount in order to qualify for the mortgage.

E

• Effective interest rate
  DE Effektivzins

  Actual interest rate including all credit costs

• EMI equated monthly installment
  DE Gleichgesetzte monatliche Rate

  Is one part of the equally divided monthly outgoes to clear off an outstanding loan within a stipulated time frame

• Equity
  DE Eigenkapital

  The difference between the value of the property and the mortgage amount. Over time, as the amount of loan decreases with payments, the equity of the home generally increases.

• Estimated cost
  DE Schätzkosten
  Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua.

F

• Fixed-borrowing rate
  DE Sollzinssatz

  The interest rate doesn't fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments.

• Fixed interest term
  DE Sollzinsbindung

  The amount of years the interest rate on the mortgage will stay constant at the fixed rate.

• Fixed-term mortgage
  DE Festverzinsliches Darlehe

  Context: Payments are scheduled; the borrower can’t pay off the loan before the maturity date. The borrower may be able to make unscheduled/voluntary payments. Often lower interest rate.

  “Can I take out a fixed-term mortgage for 10 years?”

G

• German residential status
  DE

I

• Independent mortgage broker
  DE Unabhängiger Darlehensvermittler

  An independent mortgage broker is an intermediary, linking the borrower to a lender or mortgage companies, which is usually a bank or insurance company. The mortgage broker manages the application on the customers behalf, researching products, dealing with lenders, and taking the burden off the customer.

• Initial principal
  DE
• Interest-only loan
  DE Zinszahlungsdarlehen

  This type of home loan means that you only have to pay the interest during the term of the loan, which is different from annuity loan where borrowers have to pay repayment every month. At the end of the loan term, borrowers have to refinance the mortgage or pay the rest of the loan with a one-off payment. This kind of home loan is particularly suitable for landlords and real estate investors in Germany.

   
• Interest rate
  DE Zinssatz

  This money goes toward the interest on your loan.

K

• KfW
  DE Kreditanstalt für Wiederaufbau

  KfW is a German government owned development bank. It offers various low interest support programs that help homebuilders ad buyers with mortgage, building or renovating a home. Borrowers can often combine one funding program with others. For more information, please visit: https://www.loanlink24.com/blog/overview-kfw-funding/

L

• Lien
  DE Hypothek / Grundschuld
• Loan amount
  DE Darlehensbetrag

  The amount the borrower promises to repay, as set forth in the loan contract.

• Loan duration (calculated)
  DE Darlehenslaufzeit (kalkulatorisch)
• Loan-to-value ratio
  DE Beleihungsauslauf

  It represents the ratio of the mortgage amount to the appraised value of an asset purchased. If your deposit is 10%, then your loan-to-value ratio is 90%. If your deposit is 25%, then your loan-to-value ratio is 75%.

M

• Method of repayment
  DE Art der Tilgung
• Mortgage overpayment
  DE

  It means you pay more towards your mortgage than the initial amount agreed between you and the lender. Some banks charge a fee more overpayment while some don’t.

N

• Negative equity
  DE

  It means the value of your property is lower than the outstanding balance of your mortgage

• Net income
  DE Nettoeinkommen

  Monthly income after taxes

• Notary
  DE Notar
   The notary certifies that the property is available to sell and draws up the purchase contract. Once signed, the notary will forward the relevant documents and information to the proper authorities.
• Notary and land register fee
  DE Notarkosten und Grundbuchgebühren

  In Germany all real estate purchase contracts must pass through a notary. The notary not only certifies that the property is available to sell, but also draws up the purchase contract itself. And, once the contract is signed, the notary must also forward relevant documents and information to the proper authorities.

  → 1.5% of the purchase price

O

• Open-term mortgage
  DE Darlehen ohne feste Laufzeit

  Context: A borrower generally can pay the loan off at anytime. Often higher interest rate.

  “I may be able to pay off my home loan within just 3 years - can I get an open-term mortgage?

P

• Paid debt
  DE Bezahlte Schulden

  Amount of paid debt after a certain time

• Paid interest
  DE Bezahlte Zinsen

  Amount of paid interest after a certain time

• Partial payment surcharges
  DE Teilauszahlungszuschläge
• Payment method
  DE Zahlweise

  Describes the reimbursement

• Payout ratio
  DE Auszahlungskurs
• Processing cost
  DE Bearbeitungskosten
• Property price
  DE Immobilienpreis

  The property price must exclude any additional fees such as a real estate broker courtage, taxes and notary land register fees

R

• Rate
  DE Rate

  Monthly amount to pay off the loan

• Real estate agent fee
  DE Maklergebühren

  Can vary between 3,57% to 7,14% dependent on the state where the property is located.

• Real estate purchase fees
  DE Immobilien Erwerbskosten

  Are additional fees not included in the purchase price like real estate transfer tax, notary fees, land register fees and any brokerage commissions.

  Importantly, these fees do not include the cost of the property itself. In Germany, purchase fees may amount to up to 15% of the property’s purchase price

• Redemption free start-up years
  DE Tilgungsfreie Anlaufjahre
• Remainder of debt after fixed term
  DE Restschuld am Ende der Sollzinsbindung
• Remaining debt at end of fixed term
  DE Restschuld am Ende der Laufzeit

  Most mortgages cannot be completely paid off during the fixed-term. These remaining debts have to be refinanced with another credit.

• Repayment rate
  DE Tilgungssatz

  This is the money going to pay down your loan balance each month. As time goes by, you will pay a higher amount toward principal and less to interest.

• Residence status
  DE Aufenthaltsstatus

  There are different statuses that lead to different mortgage options

S

• Stamp duty (Real estate tax)
  DE Grunderwerbssteuer

  Can vary between 3,5% to 6,5% dependent on the state where the property is located

  Alternate terms: real estate transfer tax

T

• Term
  DE Laufzeit

  Context: The length of the mortgage is generally called the term of the mortgage. A mortgage can have a fixed term - the time during which the interest rate is fixed.

  “What is the average term for a mortgage?”

  Alternate terms: life (for loan/mortgage), runtime (more rarely)

• Time until complete down payment
  DE Zeit bis zur vollständigen Tilgung

  Time until the mortgage is completely paid down. In most cases after refinancing.

• Time without commitment interest
  DE Bereitstellungszinsfreie Zeit

U

• Unscheduled payment
  DE außerplanmäßige Tilgung

  Context: In Germany, mortgage consumers have the possibility to pay off a certain amount of the loan once a year → voluntary / unscheduled repayment

  “Do I have the right to make an unscheduled payment once a year?”

  Alternate terms: unscheduled payment/unscheduled repayment/voluntary payment can be used interchangeably in American English

• Unscheduled voluntarily payment
  DE Sondertilgungsmöglichkeiten

  Some lenders offer you the flexibility of an voluntary repayment once a year. It's an extra payment on top of your regular monthly repayment and it allows you to pay off your mortgage faster. At the same time, the interest on your remaining debt also declines. The maximum yearly payment is typically 5% of the initial loan volumes. The possibility of the amount and frequency of voluntary repayment are specified in the loan agreement.

V

• Variable loan
  DE Variables Darlehen

  The interest rate you pay is adjusted regularly to the current Euribor (Euro Interbank Offered Rate). The benefit of this type of home loan in Germany is that borrower’s loan becomes cheaper when the rate is low. However, monthly financial burden also increases when interest rate rises, thus, borrowers should convert it into a fixed-interest loan in this case. Processing fees may also be higher in this kind of loan compared to fixed-rate loan. This type of loan is particularly suitable for short-term mortgage when Euribor rates are low.