For many, owning a home brings much desired comfort and stability. If you love Leipzig, becoming a homeowner and getting the right mortgage is actually very feasible.
Even though Germany is the largest economy within the European Union, it still has some of the most affordable housing anywhere in the continent. Leipzig is no exception. The city’s property market had become sleepy after reunification, but it is now experiencing a boom.
Being built at the intersection of two medieval trade routes, Leipzig has held strategic importance since at least the time of the Holy Roman Empire. Today, Leipzig is an economic center and Germany’s fastest-growing city. It has been ranked the most livable city in Germany, according to the GfK, a marketing research institution.
Meanwhile research by Berenberg Bank and HWWI shows the city has the second-best future prospects of all cities in Germany. On top of that, it’s also just a 90-minute drive from Berlin.
Combine the strategic location of Leipzig, its historic beauty, and the fact that Germany’s property market offers a strong return on investment, and boom – more and more expats are buying their home in Saxony’s largest city.
Property values in Leipzig are on the rise
Home values have been rising across Germany over the last decade. According to Deutsche Bank Research, prices have risen by 60 percent in some cities. The graph below shows the property price changes in various major German cities between 2008 and 2018. While Munich remains the most expensive city in Germany to buy a home, Leipzig remains relatively affordable compared to others, while still offering a solid return on investment.
So what should you consider when buying a home or an apartment in Leipzig?
Buying a property as a non-German speaker may seem like a daunting and complicated process. Let’s look at the factors you should consider when searching for a mortgage for a property in Leipzig.
Evaluate how much you can afford to repay monthly
Before starting your property search, it is essential to find out what your monthly repayments might look like so you can avoid any potential disappointment.
Using mortgage calculators can help you understand, for example, how much you can afford and borrow, so you’ll have an idea of how much you would spend to buy a home in Germany. With a mortgage repayment calculator, you’ll know in advance how much you would pay monthly and see if you have a sufficient down payment to afford the property you want to purchase.
Follow German mortgage interest rates closely
Interest rates in Germany have decreased drastically over the last decade, making the current market favorable to get a mortgage. Securing the best rate hinges on several factors. Not only does a mortgage interest rate calculator show you the most updated interest rates, it also helps walk you through various factors that influence the rate banks will offer you. Variables considered include:
- Down payment: The bigger down payment, the more likely you are to secure a lower interest rate
- Borrowing amount: A higher borrowing amount usually leads to a higher interest rate
- Fixed rate period: The longer the fixed interest rate period, the higher the interest rate
Important tip: getting pre-approval
Getting a mortgage pre-approved is a must for any buyers in Germany. It protects you from disappointment down the road, since you can rely on the lender’s commitment. It also assures your seller that you can afford to purchase the property.
In fact, some sellers even refuse to enter into negotiations until the buyer can prove that they are qualified for financing.
Buy-to-let in Leipzig is an attractive option
Due to strong demand for living space that shows no signs of slowing down, the average asking rental price increased by approximately 6.5 percent across all price segments and neighborhoods in the first half of 2018. It reached €7.00 / sqm / month, according to research by JLL. If you’re interested in buy-to-let, it’s worth noting that landlords can deduct mortgage interest from rental income taxes as a business expense. Click here to learn more about property prices in Leipzig.
Interested in buying a home? Consider using a digital mortgage broker service
Given that there are over 400 mortgage lenders available in the German market, it can be difficult for traditional mortgage brokers to identify the best mortgage offer that fits your personal situation. You can consider using a digital mortgage broker service. One of the prominent advantages of such brokers is that, powered by advanced technology, they can help you compare all mortgage options and guide you through every step of your application. This saves you time and money.
An example is LoanLink, Germany’s first certified digital mortgage broker. They specialize in assisting international investors and expats to achieve their goal of owning their home in places like lovely Leipzig, or as buy-to-let investments. They offer services in English, Chinese, Russian, and German, and help customers get pre-approvals to ensure a smooth property purchasing process.
In a few clicks, you can find the best mortgage offer that suits your personal and financial circumstances. You can also speak with their mortgage experts to start applying for a mortgage.
This service is free of charge to consumers, as the company is only paid a commission by the mortgage lender once the mortgage deal has been executed. Talking with a mortgage expert can help ensure that you receive a tailor-made solution. Being well-informed about the estimated total cost, and financing options and conditions, can make buying a home for non-German speakers and international investors a transparent and hassle-free process.