Additionally, in the following there may be slight grammatical errors, as this article was written by a German tax expert. This does not detract from the quality of information.

Sanierung, Modernisierung or Renovierung? Why?

Further down we explain all the details about things you have to know about renovating or refurbsihing your house or property in Germany. But first, we look at what the terms which you will often hear in the German real estate market even mean. So, what does Sanierung mean?

What is a “Sanierung”?

A Sanierung is an improvement on fundamental issues or problems which make living in a building difficult or very uncomfortable.

In German, there are multiple words for what in other countries may all fall under the term renovation. There are three types of these. First, a Sanierung, which is a very fundamental improvement and update to all things in the house, this means e.g. old sinks may be replaced. The translation of Sanierung is refurbishment. In general this is more effort than just a renovation, as a real issue is fixed. A renovierung is the second type. Here, more aesthetic things like the colour of the walls will be redone. Lastly, a “Modernisierung”. This is, as the word implies, when current state of utilities, walls, etc. are made more modern.

Sanierung is a renovation which fundamentally removes problems in your apartment, house, etc.

This article is part of our guide on German real estate and tax optimization. Learn more here:

• Save Money – Tax Optimization with Property Investments

Sanierung as Effective Increase in Value of your Property

The renovation not only provides a modern look, it also saves energy and thus increases the value of the house. For economic reasons, renovation often makes sense. This is also true if you do not want to sell the house and hope to get a higher sales price by the renovation. Because by the so-called energy renovation you can reduce your additional costs significantly, so that the investment pays off in the long run.

Risk of Damage Decreases: Selling Price Increases

In addition, the premiums for residential building insurance for refurbished houses are significantly lower than for properties without core refurbishment. This is due to the fact that the risk of damage is significantly reduced, so that in many cases more than half of the insurance costs can be saved. If you would like to sell your house and are not sure whether renovation is appropriate, you are welcome to contact us.

Holistic Refurbishment: One-time Expense

When renovating a house, it should always be considered as a whole. Because only extensive renovation leads to better living quality and lower energy costs. For buildings in desolate condition, a core renovation is necessary. In addition, under certain circumstances a roof renovation can become due. This is the only way to create the optimal basis for a renovation. Afterwards, a tight building envelope is produced, which, due to good insulation, ensures that the heating remains in the house.

This also includes the installation of a new heating system, which at least partially uses renewable energies. Multiple glazed windows with good insulation also contribute to a better energy balance.

Modernization and value enhancement at a glance:

• Increase in value through modern appearance
• Energy efficiency and economy
• Higher living quality
• Reduction of additional costs
• Higher selling price

Core Renovation & Roof Renovation

Before you start with the renovation, you should have an expert determine which measures are necessary for your house. Once you have identified the weak points, you can start planning.

Core and roof renovation is by no means necessary for all buildings. However, if you buy a old building, it can happen that you are suddenly faced with this task.

All electrical and water pipes are replaced as part of the core renovation. In many cases, this also includes the complete roof covering. The condition of walls, ceilings, floors, windows and doors is checked extensively. If necessary, these are also renovated. Existing rooms are not destroyed, however. No walls are torn down.

The core of the building remains intact. If inner walls are torn down so that only the outer walls are preserved, this is called gutting.

Property Under Monument Protection

Germany is known for its strict laws protecting monument and historic status of buildings. Special caution is required for buildings that are under monumental protection. In this case, you must contact the responsible office for monument protection and ask for the conditions for core renovation.

Various funding options are available for core renovations, so you can save a lot of money. For example, you can deduct the costs for the craftsmen from your tax return and recoup up to 20 percent of the expenses.

20% craftsmen costs are reimbursed in your tax return

However, the maximum amount for a refund is 1,200 euros. In addition, there is the possibility to take advantage of one of the many support programs for the renovation of old buildings. However, you will usually only be able to benefit from these programs if you decide to carry out an energy-efficient renovation.

The subsidy programs differ from region to region and therefore vary greatly. A certified energy consultant can advise you in this regard and help you find the right program for you.

Maintenance Reserve According to Calculation Regulation

Reading Tip! In our formula collection you will find many more important formulas for the calculation of reserves, yield & Co. calculations and examples for buying, selling and renting. Rent or purchase price multiplier, gross yield, return on equity, property yield, reserves for repairs and much more.

There are too many small hidden costs when buying real estate in Germany to remember. Our guide:

• Hidden Costs when Investing in German Real Estate

Peter’s formula

The Peter’s formula assumes a useful life of 80 years.

The formula means that in a certain time 150% of the pure production costs (building costs without costs of paying for property, development, architect, etc.) for maintenance and reorganization will come up again.

For a House
80 years useful life
150% of production costs for renovation, maintenance

For condominiums in multi-family houses, the assumption is 100%. Distributed to 65% for work on common property and another 35% for work on special property.

For a Condominium
80 years useful life
100% of the manufacturing costs

Reserves Formation

If you calculate further exemplary with an object, whose production costs are 4,500 Euro per square meter, then this results in a monthly reserve of 7.05 Euro per square meter.

Reserve: house
Production costs: 4.500 € / m²
Monthly reserve: 7,05 € / m²

For condominiums, this results in a somewhat lower reserve of 4.50 euros per square meter for the owners’ association.

Reserve: condominium
Production costs: 4.500 € / m²
Monthly reserve: 7,05 € / m²

Tip! These are divided into the aforementioned 65% for work on common property and another 35% for work on special property.

• Reserve for owners’ association: 4.65 / m²
• Reserve apartment owner: 2,40 € / m²

These costs cannot be passed on to the tenant.

Annual reserve according to § 28, paragraph 2

Also the second calculation regulation supplies in § 28, paragraph 2 reference points over the appropriate height of an appropriate maintenance reserve. These cost estimates are significantly lower than those according to the Peter’s formula, but are graduated according to the age of the building (based on production costs of 4,500 euros per square meter):

• Residential buildings which are up to 22 years old = 21,30 € / m² living space
• Residential buildings which are up to 32 years old = 27,00 € / m² living space
• Residential building over 32 years = 34,50 € / m² living space
• Building with elevator + 3,00 € / m²

Energy Renovation: Low Energy Consumption

Energy-efficient refurbishment is the repair of a building with the aim of ensuring the lowest possible energy consumption. If you do an energy update, you save heating costs, contribute to climate protection and can look forward to more living comfort.

This makes sense not only if you want to live in the house yourself, but also if you plan to sell your house.

More and more people are looking for sustainable and energy-saving houses. So you increase your chances on the housing market with an energy-efficient renovation. An important component of energy-efficient renovation is the effective and complete insulation of the building envelope. A continuous airtightness is the top priority here.

Outer Building: Outer Walls, Roof, Front Door, Windows & Co.

The building envelope includes not only the exterior walls, but also the roof, front door, windows and basement ceiling. All these parts shield the living space from the cold outside air. Poor thermal insulation of the building envelope has a catastrophic effect on the energy consumption of the house.

Up to – 50% reduction in energy demand = running costs

In many cases, the need can be reduced by more than 50% by means of an appropriate renovation.

Insulation: Mineral Fibers, Natural Insulating Materials & Co.

Various materials are used for insulation, such as mineral fibers or natural insulating materials, for example cellulose, hemp or cork. The higher the insulation thickness, the more energy can be saved. Leaks and thermal bridges must be avoided at all costs.

An airtight building envelope provides the best savings. With a modern heating system, which is largely powered by renewable energies, you can reduce the ecological footprint of your house and thus contribute to climate protection. At the same time, you can save energy with a new heating system, because most oil and gas heating systems are outdated and have poor efficiencies. Therefore a lot of heating energy is wasted.

Even if you choose a classic heating system that runs on fossil fuels, you may be able to save a lot of money.

Future-Oriented Heating Systems: Heat, Pellet & Co.

However, heating systems that use renewable energy are of course more future-oriented. You have a large selection of different systems. For example, there are heating systems that use solar energy or domestic hot water. Geothermal heating systems are also possible. Pellet heating systems are also considered climate-friendly. Which solution you choose depends not only on your preferences, but also on the individual circumstances. An energy consultant will find the optimal solution for you.

Before the “Sanierung”: Energy Consultation

Before you begin with the energy renovation, you should take an energy consultation. Only with the help of an expert can you get the best out of your house. This is due to the complexity of the topic.

A house is always an overall concept that is influenced by many small changes. These should influence each other as positively as possible. Individual renovation actions that are carried out unprofessionally often do not bring the desired effect or even lead to unexpected additional costs.

Certified Energy Consultants

In order to avoid this problem, let a certified energy consultant help you best. In Germany, these are certified and highly specialized professionals. These experts investigate the condition of the building and develops then together with you a concept for a meaningful and goal-prominent energy counselling.

He not only inspects the building, but also takes your needs into consideration and of course includes the budget in the planning.

In addition, he can point out possibilities to you that you did not even know existed before. If you are looking for a good energy consultant, you can for example contact the chamber of architects of your federal state or search the internet for a suitable expert.

State Subsidies

The German state encourages green energy, and therefore subsidizes it. Just like the energy renovation itself, the costs for the energy consultant can also be supported by subsidies. The Federal Office of Economics and Export Control subsidizes the energy consulting for single and two-family houses as well as for residential units.

• State subsidies – official site of the federal office (in German)

Redevelopment of Old Building

Renovating old buildings – Old buildings are very popular because of their unique structure. Large rooms with high windows and old wooden doors, which may creak a little when opening and closing, stand for a traditional way of life. Many of the buildings are more than one hundred years old. A renovation can give the apartments a new shine. If extensive work is planned both on the façade and the interior, it is advisable to relocate tenants in advance.

For a complete refurbishment, the move-out of tenants is even compulsory. The same applies to owners who, with the support of the owners’ association, have agreed on a renovation in a majority resolution. However, owners who have acquired a property for the first time also like to strive for a renovation of an old building with subsequent new letting. There is a good chance that the renovated apartments will enjoy great popularity in all regions of Germany and will subsequently be rented out at short notice.

Heating System

The topic of heating is not only interesting for building owners, but also for property owners. Heaters are not only necessary in a real estate, but also legally required. What types of heating are there, how do they have to be maintained and are there legal subsidies for the construction of certain types of heating or do the costs have to be paid completely by the owner?

• The whole guide: Heating

Solar heat: Solar Energy

Solar thermal is the process by which solar energy is converted into usable heat. In residential properties, the heat produced is usually used to heat water or for heating. Depending on the location and conditions of the property, this system can completely replace the previously used heating system.

State subsidy of 2,000 euros

Gas Heating: heating with natural gas, liquid gas or biogas

Gas heating is probably the most widespread type of heating in Germany and rightly so, because the system offers many advantages. Modern technology, efficiency and inexpensive offers characterize the gas heating. In addition, they are easy to combine with renewable energies, save space and can be easily installed during modernization and renovation.

Oil Heating: Heating with fuel oil or bio fuel oil

Oil heatings are after gas heatings the probably most frequently occurring systems in Germany. The function mode is simple and works for decades in the same way. The fuel fuel oil is pumped over an oil pipe to the heating system where it is sprayed and burned. The heat that is generated during this process is used to heat up the heating water and thus to heat the house. Most of these components can be found in the boiler, which now takes up little more than one square meter of space and can even be hung on the wall, depending on the model.

Pellet Heating: Ovens with pressed wood residues

A modern pellet heating system is known for low fuel costs as well as for environmentally friendly heating and is therefore one step ahead of conventional gas and oil heating systems. Also the function mode is relatively simple. The wood pellets are periodically delivered to the combustion chamber by means of a feeder, so the correct filling is fully automatic. The heat generated by burning the pellets is used in a separate boiler to heat the water. Thus, both the heating can be operated and the hot water can be produced.

Rental: Laws, Taxes & Tenants

Renting a property can be a great extra income, but it can also become your main job. Landlords have many duties towards the tenant and have to take care of the property. However, if this is successful, a lot of profit can result. We will explain how you can best let your property and how to find the right tenant for you.

There is so much to learn!

The Right Tenants, Suitable Lease & Co.

How do I set the rental price correctly? How does my advertisement appear attractive? And how do I draw up a suitable and fair rental contract? A future landlord asks himself all these questions, because in order to successfuly rent out a property, a lot of knowledge and experience is required. But if you follow a few simple steps, you will make the leap to a successful landlord and profit from the earnings.

In addition come: Landlords have many duties and tasks, among these are for example the organization when changing tenants or the annual preparation of a service charge statement for the tenant. The rent can be set with the help of the local rent index, but it must always be considered whether the region concerned has a rent brake or not. The rental agreement should be fair for both tenant and landlord and should regulate all important points. When choosing the right tenant, it is not only the sympathy effect that counts, but also other important factors, such as creditworthiness – learn everything you need to know about renting your property in our article.

The correct tenants, suitable lease & Co. read on here:

• Leasing out House & Apartment.

Conclusion: Renovate Property

A core renovation brings your property up to date and increases its value at the same time. It increases the comfort of living and in most cases also reduces the energy consumption of the house. As a result, energy costs and the C0² emissions of the house can be reduced. Since in the long run a change to non-fossil fuels from heating systems is inevitable, you can also equip your house for the future. In order to carry out a renovation as effectively as possible, it is essential to seek the advice of an energy expert.

Thinking about buying a house? These are the best methods to save money on your investment

• Saving Money – Tax Optimization on German Real Estate

Real Estate – All Taxes you Pay when Buying Real Estate

Buying a house is a massive investment, and most people are surprised by the many additional costs. To begin to understand all the extra costs which the purchase of a house brings, means understanding the taxes. That means, that the three types of taxes listed below are all the necessary costs which you will pay to the government in the area of the home you are purchasing.

Upfront Taxes – What are Pro-Rata Taxes?

When buying a home in the United States, you are typically required to pay 6 months of property taxes in advance upon purchase. That means six months worth of property tax, called pro rata. Yet, on the purchase of the property, there are only three taxes. Which makes this quite easy to understand. The property tax is the tax which an individual has to pay annually for owning property, the transfer tax is the tax on the purchase of the home, and the mortgage recording tax (where it exists) is the tax on the recording of the mortgage.

• Taxes you pay in advance!

Many of these taxes can be deducted from your federal tax sheet. Learn more:

• Real Estate Tax Deductions Explained

Do you have to pay Sales Tax on Real Estate?

No. In federal law, real estate such as homes, property, or land, are not subject to sales tax. Although some states do have sales tax on items which may be interpreted as being a home (e.g. a mobile home).

Taxes You Must Know – Most Important Real Estate Taxes

These are the taxes you have to know about when paying for your home. How each of these is calculated depends on the city, county, and state the real estate is bought in. The three relevant taxes which you will incur when purchasing a home are property taxes, transfer taxes, and mortgage registration tax. Not all exist in all states, and there are many intricacies to note.

Property Taxes – Do You have to Pay Property Tax when Buying a Home?

Property Taxes are ad-valorem taxes which you pay for owning property. Most typically, this property consists of land, as well as anything which is permanently attached, such as any real estate, but also, roads, docks/wharfs, pools, etc. In some states, the property tax even includes items such as boats. When buying a house, these must be paid in advance, and then received back from the seller. Property taxes are typically a rate which is multiplied by the estimated value of the property. This value is estimated by an appraiser, and takes into account location, age, etc.

Avg. US Property Tax: 1.11%

To calculate property taxes, you receive a rate, which is influenced by local, county, and state laws. E.g., a house in Hawaii, worth USD$1 mil., will cost USD$3,000 in property taxes a year. Yet this does not take into account the rate which a specific county in Hawaii may add to this.

• U.S. States Property Taxes

Transfer Taxes – What is it? Who Pays transfer Taxes?

Transfer taxes are argued to be taxes which pay for the work and materials invested when documenting the purchase of a new home. This is why they are sometimes also called documentation taxes. They are one time fees upon the transfer in ownership of a home, i.e. when buying or selling a house. These are sometimes paid by the seller, and sometimes by the buyer, with some states stipulating who, and sometimes the real estate agent mediates between seller and buyer.

• Sometimes paid by seller, sometimes by buyer

Avg. US Transfer Tax: 0.6%

These are often felt to be one of the more complicated taxes because the rate does not only differ by state, but also between counties and between cities. E.g. in New York you have the New York State (0.4%), New York City (1,4%), Mansion (1%, only when buying a house > USD$1 mil.) transfer taxes. Meaning when you buy a house for USD$1 mil., there is a total of USD$28,250.

• U.S. Real Estate Transfer Taxes

Mortgage – What is a Mortgage Registration Tax?

This tax is based on the amount of debt being secured by the procurement of real estate. It is a state-based tax, and is paid towards the locations where the mortgage is documented and recorded. If the buyer wants a mortgage, the buyer pays the registration fees for the mortgage. In Minnesota, there may be an additional tax such as an “environmental response fund tax”. The 7 states which require a mortgage tax are Alabama, Florida, Kansas, Minnesota, New Yoek, Oklahoma, and Tennessee.

Avg. US Mortgage Registration Tax: 0.2%-.4%

The amount required is again based around the amount included in the mortgage. E.g. in Minnesota county, there is a 0.23% mortgage registration tax, when a mortgage worth USD$1 mil., you will pay USD$2300 in mortgage registration tax.

• U.S. Mortgage Taxes

Closing Costs Real Estate – Hidden Additional Costs

These taxes are just some of the many additional costs which accompany the purchase of real estate. Buying a house means paying attorneys, brokers, and many other individuals or organisations. And these additional costs can equal as much as 5-6% of the total purchase price of the property. We’ve broken down all the costs you have to know about in our article

• Buying Real Estate – All Additional Costs

KfW Loan: Effective Relief for Construction Financing

Would you like to renovate your home to make it more energy efficient or to make it suitable for the elderly? Then experts will find a suitable KfW loan on your behalf that will noticeably lower your total interest rate on a building or real estate loan.

• • What is a KfW loan?
  • Who gets a KfW credit?
  • How high are the interest rates at KfW?
  • When can I apply for a KfW loan?

Terms and Use

Financing your own home in two ways is a very practical and inexpensive option, as you always benefit from a KfW loan and choose the best interest rate within your mortgage.

5 and 10 year Terms

A KfW loan is a annuity loan that is designed like a classic construction loan in its components. Depending on the support program, the KfW loan can run between 5 and 10 years and convince you with a fixed debit interest rate. If the financing interest rate rises within this period, your KfW loan is not affected by this change.

You can make your construction financing economically more efficient by financing the highest possible amount via the KfW and in return reduce your actual construction financing amount.

Support Program has 3 Advantages

Depending on the support program, a KfW loan has three basic advantages. You receive an unbeatably low interest rate, benefit from graceful start-up years and from grants that you receive as part of a grant and do not have to repay. Especially the initial phase of a loan repayment requires you to make a major change with a noticeable additional financial burden.

While you have to repay the construction financing from the first month of the term, you can benefit from one to five years of repayment freedom with a KfW loan. You only start paying off the loan after the initial term has expired and then pay the monthly constant installment at the favorable interest rate. Keep in mind that the monthly installment increases from the 4th year of repayment.

Interest far below the interest rate of the Building Loan

Nevertheless, a KfW loan is always worthwhile because the interest rate is far below the interest rate of the building loan and because you benefit from innovative support programs with redemption-free subsidies.

When and for Whom is a KfW loan Suitable?

When deciding on a KfW loan, you should not only be aware of the advantageous special features but also of the additional factors that need to be taken into account. You do not apply for a KfW loan directly at the “Kreditanstalt für Wiederaufbau”, but at an onlending bank (“durchleitende Bank”). For KfW loans of more than 30,000 euros, the bank making the transfer makes an entry in the land register. In the case of lower subsidies, the entry in the land register is not made in principle.

Carry out Follow-up Financing

In addition to the initial financing with the additional module of the KfW promotion, you have the possibility to make your follow-up financing with a KfW loan. With a KfW loan, you ultimately always decide to finance your property with two different loans that are separate from each other but still build on each other.

The complexity of a professional construction financing tailored to your needs and the best conditions should not be underestimated.

Tip! KfW loan for Modern Heating System

Did you know? Example: oil heating. Here, the KfW Bank promotes individual measures with its program 152, which result in higher energy efficiency and a reduction of energy costs. Not only the replacement of the oil heating system is thus promoted, but also the installation of highly efficient circulation pumps and a circulation pump.

Extras are also available for solar systems. Within the range of in and two-family houses a lump sum for the building of a solar plant of 2.000 euro can be requested, which serve both for the water heating and for the heater support. This flat rate applies to solar systems up to 14 square meters. With a size of 15 to 40 square meters 140 euro per square meter are granted at gross collector surface.

• KfW loan for modern heating system

Joint Ventures in Real Estate: Owning and Selling, Co-Ownership

Several owners and one wants to sell – what now? For various reasons, people buy real estate together. When selling real estate from collaboration or inheritance and estate, before private sale or through a real estate agency, many questions arise. From simple topics to the selling price up to more complex tax questions, like:

• What is a joint venture?
• What is fractional ownership?
• Is it possible to sell co-ownership?
• What is the co-ownership share?
• Who is the owner of the house?
• What does ideal co-ownership share mean?

The possession of several persons on a thing defines itself briefly in such a way:

• Classic examples: Single-family house or shared condominium

Joint Venture in BGB § 741

§ 741 Community by fractions – If a right is jointly entitled to several persons, the provisions of §§ 742 to 758 shall apply unless the law provides otherwise (community by fractions).
The most important keywords in the joint venture are for you:

• Land
• Voting
• Land Register
• Right of First Refusal
• Voting Right
• Declaration of Division
• Administration Agreement

Back to the Wiki: Real Estate

The Purchase: Broker, Commission & Credits

With the first thoughts of a real estate purchase many questions arise immediately. What is the best way to proceed? Do I need an estate agent or should I search on my own? How big should the house be, how many square meters and rooms does it need? In which area do I search and above all how much budget do I need? We will now get to the bottom of all these questions.

The requirements – the way to your dream property

As a first step on the way to your dream property, you should first consider what your requirements are for your home. How many rooms do you need and how many square meters should your house and your property have in the best case? Of course, they should also be aware of the area they would like to move to and use this scheme to adapt to your needs. A house in a city will be more expensive than a house in a suburb or in the country. Do you need a school nearby or should a supermarket be within walking distance. Do you want a garden or a child friendly environment. Of course you should also think about the exterior of your property. Do you prefer a certain style of house, should the house be more modern or more Nordic style? After you have clarified these basic questions and know how you imagine your dream property, you can proceed to step 2.

Real estate as capital investment: Special

1. Part: Classical or exotic investment – Which real estate is suitable as capital investment?
2. Part: Real estate as capital investment – What do I have to pay attention to?

Financial planning – financing possibilities and requirements

The financial planning takes a large part with the way to the own house, because with construction financing and loans one enters a large obligation, which can cover several decades. Therefore everyone, which plays with the thought to buy a real estate should examine itself first once the financial own resources. In addition belongs for example whether property or a building society contract is already present and how highly this is. Also should be examined which means can be actually called at short notice. In order to obtain a loan from a bank, it is recommended to have at least 10-20% of the required sum (purchase sum and ancillary purchase costs) as equity. The higher the equity capital, the better.

Financial resilience

Of course, personal circumstances also play a role in financial resilience. These include, for example, family planning and the desire to have children, the employment relationships of the partners and of course marital status. One should consider whether further large financings are planned in the next years and how these affect the financial situation. It is also important to determine the permanent expenses so that these can be included in the planning. This includes fixed costs, such as insurance and incidental expenses, but also vacations, car purchase or provisions for financial security.

Repayment period

The next important point is the repayment period, because you should think about how long you want to make a repayment and therefore also how long you want to be in debt. It is recommended to plan the financing in such a way that the debtors are debt-free until the age of 60. However, this also depends on how high the repayment rate can be. The shorter the repayment period, the higher the repayment, but there are also somewhat cheaper interest rates for shorter credit periods. As rule of thumb one says with a repayment rate of two per cent the repayment duration amounts to in approximately thirty years.

Compile the documents

Once these questions have been clarified, it is time to compile the documents for the banks, because they need many different documents to be able to apply for an offer in the first place. Such documents include monthly income, which is proven by the income tax assessment, as well as a list of regular expenses and current assets. Also, at this stage they should already have a purchase object and in the best case cost estimates, because the more accurate and comprehensive the documents they submit, the faster and better the bank can prepare an offer. Compare many different offers, from several banks as there can be many differences and you can find the best offer for your project.

Purchase of a Home: From Rental Apartment to Home of your Own

With the first thoughts of a real estate purchase many questions arise immediately. What is the best way to proceed? Do I need an estate agent or should I search on my own? How big should the house be, how many square meters and rooms does it need? In which area do I search and above all how much budget do I need? We will now get to the bottom of all these questions.

Dream property searched: Basic requirements for your house purchase

As a first step on the way to your dream property, you should first consider what your requirements are for your home. How many rooms do they need and how many square meters should their house and their property have in the best case?

Of course, you should also be aware of the area you want to move to and use this scheme to adjust your requirements. A house in a city will be more expensive than a house in a suburb or in the country. Do you need a school nearby or should a supermarket be within walking distance. Do you want a garden or a child friendly environment. Of course you should also think about the exterior of your property. Do you prefer a certain style of house, should the house be more modern or more Nordic style? After they have clarified these basic questions and know how they imagine their dream property, they can go to step 2.

Financial planning: financing options & repayment

Financial planning takes a large part with the way to the own house, because with construction financing and loans one enters a large obligation, which can cover several decades. According to this, everyone who is thinking about buying a property should first of all check their financial resources. In addition belongs for example whether property or a building society contract is already present and how highly this is. Also should be examined which means can be actually called at short notice. In order to obtain a loan from a bank, it is recommended to have at least 10-20% of the required sum (purchase sum and ancillary purchase costs) as equity. The higher the equity, the better.

Of course, personal circumstances also play a role in financial resilience. These include, for example, family planning and the desire to have children, the employment relationships of the partners and of course marital status. One should consider whether there are plans for further large financing projects in the next few years and how these will affect the financial situation. It is also important to determine the permanent expenses so that these can be included in the planning. This includes fixed costs, such as insurance and incidental expenses, but also vacations, car purchase or provisions for financial security.

The next important point is the repayment period, because you should think about how long you want to make a repayment and therefore also how long you want to be in debt. It is recommended to plan the financing in such a way that the debtors are debt-free until the age of 60. However, this also depends on how high the repayment rate can be. The shorter the repayment period, the higher the repayment, but there are also somewhat cheaper interest rates for shorter credit periods. As rule of thumb one says with a repayment rate of two per cent the repayment duration amounts to in approximately thirty years.

Once these questions have been clarified, it is time to compile the documents for the banks, because they need many different documents to be able to apply for an offer in the first place. Such documents include monthly income, which is verified by the income tax assessment, as well as a list of regular expenses and current assets. Also, at this stage they should already have a purchase object and in the best case cost estimates, because the more accurate and comprehensive the documents they submit, the faster and better the bank can prepare an offer. Compare many different offers, from several banks as there can be many differences and you can find the best offer for your project.

Search: advertisements, brokers & the big choice

There are many different ways to approach the house search. Of course an estate agent has many advantages, because he accompanies you from the beginning to the end of your search, knows insider tips and can help you with words and deeds. But if you prefer to search on your own, there are many online portals, such as ‘Immonet’ or ‘Immobilienscout24’ where you can view a large selection of exposés. Let also their friends and acquaintances know that they are looking for a house, because much can be done here also through contacts. During viewings they should pay attention to one or the other to collect as much information as possible about the property. First of all, you should only view the property in daylight, so you can see defects and faults much better than in artificial light. Take a close look at the surroundings and pay attention to possible noise, smells and the parking situation. The infrastructure around the property should also be carefully researched to compare whether it fits your requirements. A conversation with the neighbors can also reveal helpful information.

On the object itself, they should pay attention to the condition of the facade, the roof and the attic as well as the basement rooms and windows. Water stains on walls and ceilings, outdated windows with low insulation or a leaking roof can be detected during these observations. Take pictures and of the object and any faulty areas. Of course you will learn a lot about the object through the exposé, but not all questions will be answered here. So make a list of questions, so that you can find out as much as possible about the object during your visit. Possible questions could be for example the following:

• Do renovations or refurbishments need to be carried out?
• What are the roof and windows like?
• What kind of heating is in the object, how old is it and what kind of insulation does the house have? It is always useful to have an energy certificate, so ask explicitly for it.
• The floor plan with drawings of load-bearing walls to be able to plan a possible conversion.
• The operating cost account
• Check the incidence of light and the cardinal points, for example to find out when the sun shines in the garden.
• Ask about the reason for the sale and the duration of the vacancy
• Do fixtures such as kitchen, cupboards, etc. remain in the house and must they be taken over?
• Visit different objects to create a selection and to see different offers. If you are unsure, such as damp walls, etc., it is better to consult an expert and let him evaluate the whole thing.

The Search – Brokers, Patience and Advertisements

There are many different ways to approach the house search. Of course, an estate agent has many advantages, because he accompanies you from beginning to end on your search, knows insider tips and can help you with advice and support in your decision. But if you prefer to do the search on your own, there are many online portals, such as ‘Immonet’ or ‘Immobilienscout24’ where you can view a large selection of exposés. Let also your friends and acquaintances know that they are looking for a house, because a lot can be done here through contacts. During viewings they should pay attention to one or the other in order to gather as much information as possible about the property. First of all, you should only view the property during daylight, so you can see defects and faults much better than with artificial light. Take a close look at the surroundings and pay attention to possible noise, smells and the parking situation. The infrastructure around the property should also be carefully researched to compare whether it fits your requirements. A conversation with the neighbors can also reveal helpful information.

Condition of facade, roof and attic

On the object itself, they should pay attention to the condition of the facade, the roof and the attic, as well as the basement rooms and windows. Water stains on walls and ceilings, outdated windows with low insulation or a leaking roof can be detected by these observations. Take pictures and of the object and any faulty areas. Of course you will learn a lot about the object through the exposé, but not all questions will be answered here. So make a list of questions, so that you can find out as much as possible about the object during your visit. Possible questions could be for example the following:

• Do renovations or refurbishments need to be carried out?
• What are the roof and windows like?
• What kind of heating is in the object, how old is it and what kind of insulation does the house have?
• It is always useful to have an energy certificate, so ask explicitly for it.
• The floor plan with drawings of load-bearing walls to be able to plan a possible conversion.
• The operating cost account
• Check the incidence of light and the cardinal points, for example to find out when the sun shines in the garden.
• Ask about the reason for the sale and the duration of the vacancy
• Do fixtures such as kitchen, cupboards, etc. remain in the house and must they be taken over?
• Visit different objects to create a selection and to see different offers. If you are unsure, such as damp walls, etc., it is better to consult an expert and let him evaluate the whole thing.

The Legal Bases – Purchase Agreement, Land Registry & Co.

In order to buy a house, legalities have to be considered and many standards have to be met. In order to do this correctly and to make the sale of the house right, some things have to be followed.

The notarization of a contract of sale – the notary helps with land registry and more

The contract of sale meets the norm, if as stated in § 311b BGB

A notarial recording is present, when the property or property-equivalent rights are transferred.

However, the transfer of ownership is not valid after signing and notarization, but only after entry in the land register. First, a notary public prepared a draft of the purchase contract, which should be fair to both parties. This is drawn up some time before signing so that both parties can check it. At the notarization meeting, the notary reads the contract out again and both parties can ask questions. The notary also informs about the consequences of the house sale and explains the further steps of the transfer of ownership.

Until the entry into the land register, the buyer’s claim to the property is secured by the entry of a so-called conveyance notice in the land register. This ensures that the transfer of ownership of the property can be handled safely. The transfer of ownership in the land register will only be arranged by the notary when the purchase price has been transferred in full. The tax office must also confirm with a clearance certificate that the buyer has paid the land transfer tax. At which point in time the property is transferred to the buyer, i.e. the “economic transfer” takes place, is also determined in the notary contract. From this point on, the buyer bears all costs and is liable for the property. However, he is not the final owner until the transfer of ownership is complete and his name is entered in the land register.

The transfer of ownership – from seller to buyer

By concluding the purchase agreement, not only does the ownership of a property pass to the purchaser, but the purchaser also assumes all risks, taxes and burdens associated with the ownership of the property. This allows the new owner to deal with the property as he or she wishes. The transfer of ownership is precisely defined in terms of dates and is completely independent of the registration of the new owner in the land register, i.e. the transfer of ownership.

Construction & Costs – This is What You Have to Expect When Buying Real Estate

After you have decided to purchase your dream property, the question of the right financing arises. Here you should inform yourself about all possibilities, because you will have to live with the decision about a financing for the next years. Especially for inexperienced people a real estate purchase is a big step, so you should be especially sure that you find the right offer.

Construction: 6 Tips for Successful Financing

6 tips for successful financing, and check out 3 further practical construction financing tips.

Tip 1 – Determine your initial situation

Before you start your search, you should carefully determine your budget and requirements. This includes the living space, the number of rooms, the construction and equipment, the location, the architecture, the local transport and the distance to important places such as the workplace or schools. When you are sure of your requirements, clarify your budget. How much equity can you raise? It is also important to determine the maximum future monthly costs and how much you can really afford. Compare your current monthly fixed costs and expenses. Once you have created an overview, you will have a rough idea of what you can look for.

Tip 2 – Calculate a repayment

Rent and interest are real costs, but when it comes to repayment the money is used as a kind of installment savings plan. This means that your loan debt decreases while your net assets increase. So you should also include the monthly loan repayments in your bills. Think about how many years you would like to have the debt paid off and calculate with this value. Remember that the rent you pay each month is not an investment in value, while the repayment will still increase your net assets each month.

Tip 3 – Compare as many offers as possible

The more offers you request and compare, the more choice you have and the sooner you will find your dream property. Don’t be afraid to search extensively and look at many properties. Do not only search on real estate portals, but also in newspaper offers, ask your friends and acquaintances and always keep your eyes open. The efforts during the search will definitely pay off for you in the long run.

Tip 4 – Choose long-term financing

The important thing with long-term financing is that you secure the low interest rates for as long as possible. Best for the next 15 years or more. This guarantees you a solid repayment rate. Depending on the purchase price, use 20% equity or less and choose a classic annuity loan. With this loan the repayment should be about 2%. If it is higher, your return is also higher in case of inflation. If it is lower, however, you will not have the same amount of repayment as you would need to make in order not to run into difficulties with follow-up financing. If you should take up additionally still another loan, like for example a promotion loan the terms must agree, since otherwise they can threaten early repayment penalties with a sale.

Tip 5 – Get several financing offers

Of course it is most uncomplicated and simplest to take up the loan simply with the house bank and to complete the financing over it. However, there are big differences in the financing offers of different banks. For this reason you should get at least two different offers, if not even more, to find out which bank offers the fairest and best conditions. Never lose sight of the fact that the loan is for a long period of time and that an interest saving of 0.2% per year can make a huge difference for you.

Tip 6 – Do not be afraid of indebtedness

Getting into debt is a big decision, but if you choose ‘good debt’, you’ll even win money in the end. Home financing is one of those ‘good schools’, as you save on housing costs and protect yourself against inflation. In the end, you gain real wealth and do not lose any, as with an investment in consumer goods. For this reason, do not repay too quickly and stick to an initial repayment of 2% and a term of 15 years. So you do not need to be afraid of rising interest rates.

The follow-up loan – debt rescheduling and long-term planning

When it comes to financing, it is important that you prove to your bank that you are a future borrower. Because for borrowers who have already proven for several years that they are able to service the loan according to the contract, banks are happy to offer better conditions. At the beginning of a loan, the monthly installment is usually mostly interest and only in the course of time, the proportion of repayment will increase. In the case of a debt rescheduling, a part of the loan is usually already repaid. For the banks, this means that the loan-to-value ratio is lower than with an initial borrowing and the consulting effort is also lower, since the customers already know how a financing is going to work and what is expected of them. The bank has thus a smaller expenditure of work with the customer and thus also the offer preparation becomes simpler and never accordingly also less time required.

So the banks have good reasons to woo rescheduled debtors, because you can gain advantages from it. But also for the borrowers a rescheduling is often more favorable. Depending on the financial market situation, the interest rates can be so low that it is more worthwhile for you to reschedule an old loan than to continue paying it off at the old conditions. Today the interest rates are often better than when you concluded the financing. So if you can expect interest rates to rise in the future, it is definitely advisable to choose a long fixed interest period and secure good interest rates. In this way you will achieve a quick adjustment of interest rates in the event of premature termination of the old loan.
If you want to do everything right, consider already today how you want to tackle the rescheduling of your loan in a few years in order to secure a good follow-up financing. This is even doubly worthwhile if providers take over the costs of the debt rescheduling for the borrower.

The service charges – hidden costs when buying real estate

When a purchase contract is concluded, the financing is already under the umbrella. However, the additional costs are often underestimated. The invoices from the broker, notary, land registry and tax office come as soon as the loan is fixed. Because of this, the loan is often underestimated. 20% of the incidental building costs should be included in the loan at least in addition to the purchase price and are quite realistic. The overview shows the 4 biggest additional costs you expect when buying a house.

Fees – notarization of the purchase contract

The fees for the notary appointment are probably one of the largest items in the additional costs of the house purchase. The notary fees are fixed and may not deviate from these in any direction, but even these are quite high. As a rule of thumb, about 1.5% of the purchase price is fixed – and this only for the signature of the purchase contract. So if you purchase a property with a purchase price of 100,000 Euros, the notary’s fee is 1500 Euros, which the buyer usually has to pay. The exact fees for notaries in Germany are laid down in the notarial fee schedule, but can also be calculated online.

Taxes – Real estate transfer tax for the tax office

As soon as the contract is signed at the notary and the purchase contract is notarized, the buyer will receive mail from the tax office. The next step is to claim the real estate transfer tax from the buyer. This is incurred somewhat differently. Normally it is 3.5% of the purchase price of the property in Germany. In some federal states, such as Hamburg, Berlin and Saxony-Anhalt, it is 4.5% of the purchase price of the property. With a purchase price of for example 100 000 Euro you pay another 3500 / 4500 Euro for the land transfer tax. This debt should be paid immediately, because only when the amount has been received by the tax office, the latter will issue the so-called clearance certificate. This certificate is mandatory for the registration of the new owner in the land register. This is arranged by the land registry office and costs again fees, which are relatively low.

Commission – Brokers calculate your share

Whoever buys a property or a plot of land through an estate agent must of course include the commission from the agent in the overall calculation. You will usually receive the invoice from the real estate agent directly after the notary has taken the minutes. The amount of the commission varies and depends on various factors, such as the region. Mostly it varies between four and six percent of the purchase price of the property. For a real estate purchase price of 100 000 Euros, you will pay between 4000 and 6000 Euros only for the real estate agent. However, it is important to know that it is definitely worthwhile to negotiate with the real estate agent’s commission, as it is known that this is associated with a large margin of maneuver. A recommended total commission of 3.48 percent including VAT is a recommendable and realistic value.

The AAdvantages & Disadvantages of a Real Estate Purchase

Also the real estate purchase offers advantages and disadvantages. Depending on the individual life situation, different scenarios more or less offer themselves. However, buying a house is always a big investment and should always be well considered and completely thought through. As a decision guidance, we list some advantages and disadvantages of the real estate purchase.

The advantages – no rent, security and your own four walls

A house purchase, can offer many advantages. By buying a house, you live in your own four walls, you are the master of the house and can design it according to your own wishes. Besides, one has no monthly rent, which one must pay and as long as the credit is paid off, only monthly additional expenses stand in line. A house also offers a lot of space and, depending on your life situation, a lot of room for family planning and hobbies. In addition, changes can be made in your own house at any time if you want to and do not have to clarify these changes with a landlord beforehand. Further advantages are the security for the old age, because even if the pension should not be so large, one can continue to live in his home and does not have to move into smaller or more favorable conditions. A house is also a part of the inheritance for the next generation and represents an investment of value, because spent rent is lost and cannot be passed on to children and grandchildren.

The disadvantages – indebtedness and personal responsibility

Among the disadvantages of buying a house are, for example, the usually associated debt and taking out a loan. Likewise one is responsible for the object from the moment of the purchase and must let repairs, changes etc. make themselves. Besides they have much surface and area, which must be likewise maintained and thus for example work in the garden or cleaning of the house result and consume time. In addition, they are tied to one location with a house and cannot simply move to another city or live abroad for a period of time, as they enter into a commitment with the purchase.

House purchase, house building or nevertheless rented apartment ?

Buy a house or rather rent an apartment. Everyone faces the decision in very different life circumstances and for each one there is a different answer to this question. There are advantages and disadvantages for both options, but one side usually outweighs the other.

• Rent or buy a house

Buy a house: Advantages and disadvantages of real estate search

A house purchase, can offer many advantages. By buying a house, you live in your own four walls, you are the master of the house and can design it according to your own wishes. Besides, one has no monthly rent, which one must pay and as long as the credit is paid off, only monthly additional expenses stand in line. A house also offers a lot of space and, depending on your life situation, a lot of room for family planning and hobbies. In addition, changes can be made in your own house at any time if you want to and do not have to clarify these changes with a landlord beforehand. Further advantages are the security for the old age, because even if the pension should not be so large, one can continue to live in his home and does not have to move into smaller or more favorable conditions. A house is also a part of the inheritance for the next generation and represents a value investment, because spent rent is lost and cannot be passed on to children and grandchildren.

Among the disadvantages of buying a house are, for example, the usually associated indebtedness and taking out a loan. Likewise one is responsible from the moment of the purchase for the object and must let repairs, changes etc. make themselves. In addition, they have a lot of space and space that also needs to be maintained and therefore, for example, work in the garden or cleaning the house is necessary and consumes time. In addition, they are tied to one location with a house and cannot simply move to another city or live abroad for a period of time, as they enter into a commitment with the purchase.

Rent an apartment: Advantages and disadvantages with tenancy

An apartment to rent also offers many advantages but also disadvantages. First of all one has less responsibility, because in case of damages and accidents the landlord has to repair the arisen damage. Besides one is very flexible, since a tenancy can be solved relatively simply. So it is easier to move to another city or to increase the living space. However, one must of course pay monthly amounts, which are lost in this sense. So you are financially bound to certain monthly expenses. Also, it is not easy to carry out cosmetic repairs in rented apartments, as these must always be discussed with the landlord first.

Building a house: Advantages and disadvantages for the building project

Building a house is a big decision that can have many advantages and disadvantages. When building one has naturally the large advantage to get a custom-made house cut to itself. All decisions can be made by yourself, from the number of square meters to the number of rooms and the room layout. In addition, with a building of a house a large financial risk goes in addition, accompanies. Because one has no fixed price and the budget is often exceeded at the end. Besides with a house building much can go wrong, which represents likewise a financial risk. An advantage is however that one has free choice, both regarding the property and the place, where the property is located. Here one can likewise arrange individually the entire property inclusive garden. Besides a building of houses has the advantage that the newest technology can be inserted and thus a very good energy efficiency exists, which can lower additional costs again.

Whether a rented apartment, a house purchase or a house building is more suitable, is to be co-ordinated with the individual life situation. All options have advantages and disadvantages and can represent good solutions.

• Rent or buy a house