Glossary of mortgage terms

The most frequently used German mortgage terms.





  • 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

    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.


  • Construction lien
    DE Grundschuld


  • Credit score

    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.







  • 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
  • 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.





  • Negative equity

    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







  • 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.


  • 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.