DOCUMENTS FOR FINANCING A PROPERTY

Without borrowed capital, buying a property is not feasible for most people. Various documents must be submitted in order to obtain financing from a bank. We at Victor Investment give you an overview of the most important documents for property financing.

Banks do not grant loans lightly

One of the reasons why no property bubble has burst in Germany like in the USA, for example: Property financing is not granted lightly by German banks. In view of the current rise or still rising interest rates for property financing – and a high inflation rate due to the political situation in Europe – banks are taking an even closer look when checking the documents and evidence for property purchases.

For example, some banks are currently demanding more equity for good financing conditions. Whereas 25% of the purchase price was previously standard, it is now up to 28%. In addition, many banks have increased their cost of living allowance when calculating repayment instalments.

Documents that banks require for financing

The bank first checks the creditworthiness of the buyer and requires proof of income. Employees must submit pay slips, self-employed persons must submit tax assessments, income and expenditure statements or annual balance sheets. In addition, proof of equity such as bank statements, proof of securities and other assets must be provided.

In the next step, the bank checks the documents relating to the property. The following are particularly important

• The building file with all building plans and building permits
• An official living space calculation (e.g. prepared by the architect)
• A complete calculation of the usable floor space
• A current extract from the land register (not older than three months)
• A current cadastral map (not older than three months)
• Photos and descriptions of the property
• A copy of the purchase contract, if applicable

Depending on the type of property, the bank may request further documents: In the case of condominiums, it will also require the declaration of division, in the case of rented properties the rental agreements and in the case of leasehold properties the corresponding leasehold contracts. Anyone wishing to modernise the property after purchase should be able to provide a precise cost breakdown of the planned measures.

By the way: Don’t forget your identity card or passport, which the banks also need for property financing.

Where can I get the documents?

Property developer, architect, land registry office, land registry: Unfortunately for buyers, the financing documents cannot be applied for from a single source, but instead various offices, authorities and service providers have to be visited. The difficulty for many buyers usually lies in completing the applications correctly and submitting them in good time so that they are available for the financing meeting. At the same time, proof of salary statements, equity and also financial obligations such as maintenance payments or other loans must be compiled in the personal documents.

As part of our brokerage activities, we will support you wherever possible in obtaining all the necessary documents. Talk to our experts at Victor Investment or send us an enquiry for a consultation. We are there for you in Berlin, Brandenburg and the surrounding area!