What is the Repayment Rate in Germany?

Show notes

The Repayment Rate is the percentage of your loan that you pay back each month, exluding interest.The most common type of mortgage in Germany is the annuity loan. While monthly payments remain constant, the allocation between interest and principal changes over time. The suggested repayment rate in Germany ranges from 1 to 3%, but the advice is to consider individual goals, especially for differentiating between owner-occupied and investment properties.

** 📱 Register here to start investing in real estate 📱 **

There are certain tax benefits of interest payments on rental properties, making a higher interest rate more acceptable for investments. A lower repayment rate make sense for investment properties due to the long-term nature of investments. Conversely, a more aggressive amortization plan is recommended for homes, contingent on budget constraints.

It is important to calculate the financial impact of different repayment rates. Additionally, there is the option of making extra payments (Sondertilgung as an alternative to setting a high repayment rate. The text concludes by inviting readers to contact the financing team for personalized advice on finding the best repayment scenario for their specific situation.