Are you one of those people who dream of not having to pay rent any more and instead investing the money in your own property? Then, as a newcomer to Munich to get your dream home, you’ll have to dig deeper into your pockets than in other cities with prices at more than € 6,000 per sq m. On the positive Bavaria has Germany’s lowest land transfer tax at 3.5 percent.

An advantage is that when you buy a property directly from the developer, you can often save yourself the very high 7.14 percent brokerage commission in Bavaria.

And the financing? The more equity the better! As a minimum, you should be able to cover the so-called sundry purchase costs of 5 percent (the rate for real estate in Bavaria), plus, if necessary, 7.14 percent for the broker. The remaining amount must be financed with a loan. You can choose a bank yourself or hire an independent financial advisor who knows the German financial landscape with its over 400 banks. The advisor can create with you a tailor-made plan for your loan. This includes, for example, the choice of the repayment amount, fixed interest period or special repayment options. If you have never heard of these terms, then it’s high time for a financial advice!

1. household costs 
The bank checks that the finance can be paid back taking into account living, ancillary and other costs. For the costs, the banks usually work with flat rates. Regardless of the bank’s check, you should also determine for yourself what you can afford.

2. Own capital
A contribution from your own capital and other assets (life insurance, other real estate, etc.) and grants can significantly improve financing terms.

3. Extra costs
In addition to the purchase price, there are other costs, such as 1.5% notary fees and in Bavaria a 3,5% land transfer tax. If a broker is also involved, there will be brokerage fees of up to 7.14 percent. 

4. Your budget
Everything covered? It’s time to calculate your budget. Your capital must cover at least the purchase costs. If you still have capital, you can use it to reduce interest rates on your overall loan. The better the ratio of loan amount to the purchase price, the cheaper the interest. You can estimate your maximum possible loan as follows: (desired monthly rate x 12) / (interest rate + repayment rate).

budget calculation example: 

Own capital: 50 000 €
Desired monthly rate for interest and repayment: 1 000 €

Assumption:

- Interest rate: 2 %
- Repayment rate: 2 %

- Sundry costs: 12,14 %

From that follows...

Max. loan
1 000 € x 12 / (2 % + 2 %)
= 300 000 €

Max. purchase price
(50 000 € + 300 000 €) / 1,1214
= 312 110 €

5. Getting finance  
Germany’s high number of banks – some 400 in all – works in favor of customers. Besides the actual loan amount many other things are relevant when you create a finance plan. These can quickly add up to several thousand euros plus or minus. Independent financial advisers will create an individual financing plan and compare the conditions offered by the many banks.

Baumkirchen Mitte   
Nearly 600 homes for about 1,300 residents, two childcare centers and a small shopping center are being built on former railway yards at Baumkirchner Street. The Baumkirchen train track park opened in 2019 and the district will be finished in 2020.
›› Berg am Laim

Diamaltpark Allach   
750 condominiums, three children’s day-care centers and other facilities are being built on more than 8 hectares around the heritage-protected boiler house of a former soup factory with a large green area. Planned completion is 2020-2022.
›› Allach, Georg-Reismüller- & Ludwigsfelder Straße, www.diamaltpark.de

Freiham   
Since 2005, a 350-hectare new city district has been taking shape in different construction phases on this busy development site. Homes for up to 25,000 residents are planned by 2040, along with a school campus, sports park and a spacious landscaped park, among other things.
›› Freiham

Paulaner-Areal am Nockherberg  
The relocation of the Paulaner Brewery to Langwied has made available for development its former 9-hectare site on Nockherberg. Planned is an inner-city residential neighborhood with 1,500 apartments (30 percent of them subsidized housing), along with an appropriate infrastructure and extensive green open spaces. Future residents can look forward to living in a district with a varied and vibrant architecture. The development is due to be completed in 2023.
›› Au, former brewery grounds on Welfen-, Reger- & Falkenstraße

Piederstorfer-Areal   
About 1,300 apartments for different income groups have been under construction since 2019 on the 12.8-hectare site of the former Piederstorfer gravel pit between Trudering and Neuperlach. The centerpiece will be a public park bordering Tru­deringer Forest.
›› Trudering/Perlach, zwi­schen/between Friedrich-Creuzer-Straße & Karl-Marx-Ring

Quartier an der Paul-Gerhardt-Allee  
About 5,500 people will live and 800 people will work in future on this last remaining undeveloped section of the central railway area (33 hectares).
›› Pasing-Obermenzing, Paul-Gerhardt-Allee

Werksviertel   
A city within the city. A new district is being developed behind Ostbahnhof. Covering about 40 hectares it will have everything central to everyday life – homes (1,200 new apartments) offices, shopping, culture and leisure.
›› Berg am Laim

Baufi24  
Independent company that compares offers from more than 450 banks to enable faster loan approvals with less red tape. Also supports property searches as well as house and apartment valuations.
›› Beratung: Tel. 0 800 808-4000, www.baufi24.de

Dr. Klein  
One of Germany’s largest financial service providers for construction, insurance and installment credit for over 60 years with consultants at 200 locations.
›› 23558 Lübeck, Hansestr. 14, Beratung/advice line: 0 800/88 33 880, www.drklein.de

Interhyp  
Mortgage lending specialists with consultants at over100 locations. Winner of many awards, publishes lots of specialist articles on financing.
›› Beratung/advice line: 0 800/-200 15 15 15, www.interhyp.de

LoanLink24  
Independent, English-speaking financial consultants based in Berlin. Specializes in advice for non-Germans on real estate purchases in Germany. Also arranges loans from over 400 partner banks. The web page has a free real estate calculator.
›› Prenzlauer Berg, Schönhauser Allee 149, Beratung/advice line: 030/56 83-75 35, www.loanlink24.com

MLP  
Independent consultants for all finance issues from finance and insurance to retirement planning and wealth management. 100 consultants in 90 locations.
›› 69168 Wiesloch, Alte Heerstr. 40, Tel. 06 222/-308 6000, www.mlp.de