With the low default rate on German mortgages, German mortgage rates is among the lowest in the world. The average rate for non-residents is between 1,0% - 4,6% per year, depending on the term of the mortgage (from 5 years on). Please contact us for full information on interest rates.
The interest on German mortgage for owner-occupied properties is not tax-deductible. However, if you rent yout property in Germany or opt for a buy-to-let investment, any expense incurred for generating your rental income can be offset against your taxable rental income, including mortgage expense, maintenance, repairs and improvements.
A common German mortgage is the fixed-interest loan. An interesting aspect of the German mortgage system is that it allows the borrower to set the terms for the rate of principle repayment (typically between 1 percent and 10 percent of the principle amount over the term of the loan), and whether to make additional principle-only payments (up to 10 percent of the outstanding amount). At the end of the loan term any outstanding principle must be paid in full either with cash or further financing.
Interest-only mortgages are offered in Germany and favoured by investors seeking rental or buy-to-let properties. During the term of the loan, only the interest portion is paid; the principle is due in full at the completion of the loan term. The interest payments are tax deductible.
Business operators who are from non-EU countries and who manage their company on location in Germany as a self-employed person require a residence permit for the purpose of self-employment (Aufenthaltserlaubnis für selbständige Tätigkeit).
This is generally issued if
an economic interest or a regional need regarding the intended business activity exists,
positive economic consequences are to be expected from the investment project,
the planned investment has secure financing in place.
The local immigration office (Ausländerbehörde) individually assesses to what extent these criteria are met. It takes into account the following aspects:
Viability of the underlying business idea
Investor's entrepreneurial experience
Level of capital investment and availability of capital
Effects on the regional employment and (employee) training level
Contribution towards innovation, research and development in Germany
The immigration office consults the local trade office (Gewerbeamt) as well as local trade and business associations, e.g. local Chambers of Industry and Commerce (Industrie- und Handelskammer) or the Chambers of Skilled Crafts (Handwerkskammer).
Family members of foreign nationals may be granted permission to live in Germany if the foreigner possesses a settlement permit or a residence permit and if sufficient living space is available.
Spouses of foreign nationals can for instance claim a residence permit if the foreigner possesses a settlement permit or a residence permit for the purpose of self-employment. Additionally, the marriage must have already existed at the time the foreigner was granted the permit and the duration of the foreigner‘s stay is expected to exceed one year. If the foreigner posseses a residence permit for the purpose of economic activity (employed or self-employed), the spouse may take up work as well.
If these requirements are not met, it is still possible for a residence permit to be granted on a discretionary basis. Children (under 18 years of age) of a foreigner can claim a residence permit if both parents hold a residence permit or settlement permit, and if the children relocate to Germany with their parents.
A residence permit for the purpose of self-employment is limited to a maximum of three years.
If the investment project is successful (and success and subsistence appear to be secure over the long term), after three years it is possible to apply for a settlement permit (Niederlassungserlaubnis).
A settlement permit is unrestricted in time and place and automatically includes the right to take up gainful employment.