Real estate financing
Real estate financing in Berlin
Buying a property is usually the biggest financial decision in life – which makes it all the more important to have a well-planned real estate financing plan. This guide provides you with a comprehensive overview of the key aspects: Incidental purchase costs, current interest rate trends, financing with and without equity and alternatives such as installment plan. You will be well prepared to finance your dream of owning your own home or investment property.
Factor in ancillary purchase costs
Many buyers initially focus on the purchase price of the property – but in addition to the purchase price itself, there are a number of additional costs that you must include in your budget. In Germany, these mainly include notary and land registry costs, land transfer tax and, if applicable, estate agent commission.
In total, these items can account for around 10-15% of the purchase price. Notarial services (notarization of the purchase contract, land register entries) account for around 1.5-2% of the purchase price. The land transfer tax varies between 3.5 % and 6.5 % depending on the federal state – in Berlin it is currently 6 % of the purchase price. Since the new regulation of estate agent commission at the end of 2020, the buyer and seller usually share the commission, i.e. the buyer pays a maximum of 3.57% (incl. VAT) of the purchase price to the estate agent. Example: For a property for €300,000, the additional costs can easily amount to around €40,000.
Important: Banks generally expect you to pay these additional costs from your own funds. Most financiers will only lend you the pure purchase price, but not taxes and fees. You should therefore check in advance whether your own funds are sufficient to cover an additional 10-15% of the purchase price. Also consider any renovation or relocation costs – these also count as additional costs in the broader sense and can amount to several thousand euros. Our tip: It is better to calculate a little more generously. It makes sense to have a financial buffer instead of planning down to the last euro.
Current interest rates – status 2025
The development of building interest rates has turned around in recent years. In 2021, loans could still be taken out at below 1% interest in some cases – historically unprecedentedly low. However, interest rates rose sharply over the course of 2022. At the beginning of 2023, typical 10-year fixed-rate loans were already at around 3.5-4%, depending on the loan-to-value ratio. This increase marked the end of the zero interest rate era. The good news: since then, interest rates have stabilized and even fallen slightly. As of mid-2025, the conditions for 10-year loans are around 3.2-3.7 % – top offers for very creditworthy customers are even just below this. This puts us at around the same level as in 2010.
For borrowers, this means: moderate interest costs, but of course significantly higher than two years ago. Important to understand: An interest rate of 4% means that for a full repayment loan over ~30 years, you can expect a total annual charge (interest plus repayment) of around 6% of the loan amount. In other words, for every €100,000 loan, you will pay around €500 per month if you repay 2% and pay 4% interest. You should be aware of this ratio so as not to overestimate your financing.
It is difficult to predict how interest rates will develop in the future – experts currently expect them to fluctuate at this level, possibly with a slight downward trend, provided inflation remains under control. It is normal that interest rates are subject to certain fluctuations; it is therefore worth comparing interest rate offers regularly and acting quickly if necessary should the trend turn upwards again. To put this into perspective: building interest rates of ~3-4 % are still relatively low by historical standards. In the 1990s, 6-8 % were common. However, real estate prices are much higher today, which makes the absolute financing burden high despite moderate interest rates (higher loan amounts).
The right financing strategy
Pay attention to a few key points in your financing. Firstly, the fixed interest rate: 10 years is usual, but you can also agree on 15, 20 or even 30 years. Longer commitments offer interest rate security, but are somewhat more expensive (higher interest rate). In phases of rising interest rates, it is better to consider a longer commitment; if interest rates are expected to fall, a shorter commitment with a favorable interest rate and later debt rescheduling could also make sense.
Secondly, the repayment amount: set a repayment rate that suits your budget. With 2-3% initial repayments, you are on a solid path to getting the loan debt-free within 25-35 years. Lower repayments lead to a very long loan term and high interest payments overall.
Thirdly, you should pay attention to flexibility: Many banks offer special repayment options or variable repayment adjustments. This is helpful if your income changes (e.g. bonus payments, inheritance or parental leave). Compare offers from different banks or use intermediaries to get the best mix of interest rates and conditions. Pay attention not only to the figure in front of the decimal point, but also to hidden costs (commitment interest in the event of a delay in construction, fees) and the level of advice. A binding financing certificate from the bank can also strengthen your negotiating position when buying – if you can prove that the financing is in place, the seller will give you preferential treatment.
Equity – how much is needed?
The equity ratio is a decisive factor. Traditionally, 20-30% of the purchase price is recommended as equity in order to obtain a favorable loan. In our example of a €300,000 property, this would be €60,000-90,000 of your own funds. This will also finance the ancillary costs. However, many buyers – especially young families – have not been able to save this much. As a general rule, the less equity, the higher the risk and the more expensive the interest rate.
Financing without equity (100% or 110% financing) was offered by some banks in the last boom years, but has become rarer and is subject to strict conditions. Anyone seeking such a loan should have a very stable income and a high credit rating. The banks also check the value of the property even more closely. As an investor, full financing can be attractive in order to use the equity leverage – but here, too, the calculation must add up:
This is only worthwhile if the rental income is significantly higher than the interest and repayment. Private owner-occupiers should only take on 100% financing if the monthly installment is affordable and ideally there are still reserves. Our general advice is: Use existing equity at least for ancillary costs and part of the purchase price. This lowers your loan and gives you a buffer in case of unforeseen expenses. Banks also reward a higher equity ratio with better interest rates.
Financing without equity – tips
If you still want to buy without savings (whether for strategic reasons or because the opportunity is right and you don’t have the equity), here is some practical advice: Get several offers and talk to banks in person.
You may be able to negotiate special conditions in a direct discussion, especially if you disclose your entire financial situation. Show the bank a detailed budget and – in the case of investment properties – a calculation of the return. The more it appears to the bank that your investment is well thought out and profitable, the more likely it will be to get involved. You need to give the bank the assurance that you can shoulder the higher rate without any problems.
This includes having your finances under control: Make sure that you have no negative Schufa entries, that existing consumer loans are paid off if possible and that your regular cash flow is positive. It often also helps to present a repayment strategy – e.g. how you intend to make unscheduled repayments over the next few years or that you can increase your repayments as your income rises.
If available, additional collateral (such as a debt-free second property or guarantees from solvent relatives) can also convince the bank. Ultimately, full financing is a higher risk – for you and the bank. Therefore, always calculate conservatively and consider whether there are alternatives (e.g. buy a smaller, cheaper property first or have a family member participate with a low-interest personal loan as an “equity substitute”).
Installment plan – an alternative to outright purchase?
You may have come across the concept of installment plan. This is a model in which you initially rent a property, but at the same time enter into a contract that gives you the right (or even the obligation) to buy at a later date. Part of the rent paid is then offset against the purchase price. Hire-purchase models are sometimes offered by housing associations or private sellers to enable buyers without a high level of equity to purchase.
Advantages: You can “test drive” the property and purchase it with a time delay while you are already living in it. Often only a small down payment is required, the rest of the financing is only due after a few years. This alleviates the equity problem – you save during the rental phase. But there are also disadvantages and risks: The agreed rent for an installment plan is often significantly higher than the local rent, as the landlord/seller deducts a portion as the purchase price.
The bottom line is that an installment plan can be more expensive than an immediate purchase with a bank loan, especially if only a small part of the rent is credited. In addition, you are committing yourself to a future purchase price, which is usually already fixed. If property prices rise sharply, this may be favorable – but if they fall or stagnate, you may be paying an inflated price. If you don’t manage to buy at the end of the rental period after all (e.g. because the financing falls through or you change your mind), you are often in a bad position: the previous “credits” may expire or you may lose an agreed down payment.
An installment plan must therefore be very carefully contractually regulated. There are also variants such as the option purchase model, where tenants have a right of first refusal, but do not have to. Overall, hire-purchases are rather rare in Germany because most buyers prefer traditional financing and sellers prefer to sell directly. Nevertheless, it can make sense in individual cases – for example, if you would not (yet) be able to get a loan at the moment, but will certainly be able to in a few years’ time (e.g. self-employed people with a short business history who will achieve creditworthiness in a few years’ time).
Tip: If you are considering an installment plan, be sure to seek legal and financial advice. A real estate lawyer should check the contract and a financial advisor can work out whether the conditions are fair. It often makes more sense to sign a normal rental agreement and save money at the same time rather than committing to an expensive installment plan – but this depends on the offer.
Conclusion: Real estate financing needs to be well prepared. Calculate honestly what you can afford and plan for additional costs and a buffer. Take advantage of the current moderate interest rates to secure a fixed interest rate for as long as possible and compare offers. Equity remains the key to favorable conditions – if possible, save at least the ancillary costs and part of the purchase price. But even without a large cushion, there are ways: from full financing for those with a good credit rating to alternative models.
At the end of the day, it is important that the financing is on a solid footing – after all, real estate loans often accompany you for decades. Ask your bank or an independent expert to carry out a cash flow analysis. And remember: Your life circumstances can change (family, job change, etc.), so build in flexibility. ADEN Immobilien has been working with trustworthy financing partners for years. We will be happy to put you in touch with them or give you an initial indication of which financing options are suitable for your project.
Contact us – we will advise you on all aspects of buying a property, from negotiating the purchase price to the right financing concept, so that your dream home is built on a secure foundation.
Frequently asked questions (FAQ)
Ideally 20-30% of the purchase price plus the ancillary purchase costs.
Yes, but only with a very good credit rating and often at higher interest rates – not suitable for everyone.
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