Glossary.

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A

Annuität (annuity)

The constant instalment made up of an interest portion and a repayment portion. With every instalment the interest portion falls and the repayment portion rises — while the total instalment stays the same throughout the fixed-interest period.

Anschlussfinanzierung (follow-up financing)

A new financing arrangement once your first fixed-interest period expires. It can be agreed as a prolongation with your existing bank, as a remortgage with a new bank, or as a forward loan before the current deal ends. Read more →

B

Beleihungsauslauf (loan-to-value ratio)

The ratio between the loan amount and the mortgage lending value of the property, expressed as a percentage. Banks usually tier their interest rates by loan-to-value — a lower ratio means better conditions.

Beleihungswert (mortgage lending value)

The value of the property from the bank's perspective, adjusted by a safety margin. It typically sits 10 to 20 percent below the market value and is the reference figure for the loan-to-value ratio.

Bereitstellungszinsen (commitment interest)

Interest the bank charges on parts of the loan you have not yet drawn down — usually after a commitment-free period (often three to twelve months). Particularly relevant for new builds where the loan is paid out in tranches.

Bonität (creditworthiness)

The bank's assessment of your ability to repay the loan. It takes into account income, assets, Schufa credit records, employment status and your personal financial disclosure.

D

Disagio (loan discount)

A portion of the loan amount deducted upfront in exchange for a lower borrowing rate. Largely uncommon today; occasionally still used for buy-to-let properties for tax reasons.

E

Effektivzins (effective annual rate)

The total annual cost of the loan expressed as a percentage. Unlike the borrowing rate, it also reflects processing fees, commitment interest and the disbursement pattern — which makes it the more honest benchmark when comparing offers.

Eigenkapital (equity)

The assets you contribute to the financing yourself. Rule of thumb: cover at least the purchase costs from equity, ideally plus 10 to 20 percent of the purchase price. Read more →

F

Forward-Darlehen (forward loan)

A follow-up financing arrangement signed today but starting only in 6 to 60 months. It locks in today's interest rates — in exchange for a premium per month of lead time. Read more →

G

Grundbuch (land registry)

The public register recording ownership and encumbrances of a property. It is maintained by the local court; entries are made via the notary.

Grunderwerbsteuer (real estate transfer tax)

The tax due when buying a property. Currently 6.0 percent of the purchase price in Hesse, 3.5 percent in Bavaria. It is paid by the buyer and falls due before ownership is transferred in the land registry.

Grundschuld (land charge)

A charge on the property in favour of the bank, entered in the land registry. It secures the loan — once the loan is fully repaid it is deleted again (for a fee) or kept in place as an owner's land charge.

K

KfW

Kreditanstalt für Wiederaufbau — the state-owned KfW development bank. Its most important programmes for private customers: KfW-261/262 (energy-efficient renovation), KfW-455-B (age-appropriate conversion), KfW-300 (home ownership for families).

N

Nebenkosten (purchase costs)

The ancillary costs due on top of the purchase price: notary (approx. 1.5%), land registry (approx. 0.5%), real estate transfer tax (6% in Hesse), plus estate agent commission where applicable (3.57% incl. VAT for the buyer in Hesse). The total often comes to 8 to 14 percent.

Notar (notary)

Certifies the purchase contract and arranges the land registry entry. Legally required for property purchases in Germany. The fee is set by a statutory fee schedule, approx. 1.5 percent of the purchase price.

R

Restschuld (remaining debt)

The loan amount still outstanding at a given point in time — typically at the end of the fixed-interest period. It determines the size of your follow-up financing.

S

Sollzins (borrowing rate)

The nominal interest rate applied to the loan. It is fixed in the contract and does not change during the fixed-interest period. On its own it says little about the true total cost — the effective annual rate is the more relevant figure.

Sondertilgung (unscheduled repayment)

A repayment above and beyond the agreed schedule. Unscheduled repayment rights are often capped at 5 or 10 percent of the original loan amount per year — free of charge with the right bank.

T

Tilgung (repayment)

The repayment of the loan principal. The initial repayment rate is fixed in the contract (usually 2 to 4 percent) and rises automatically over the term because the interest portion falls.

V

Vorfälligkeitsentschädigung (early repayment penalty)

A compensation payment the bank may demand if you pay off the loan early during the fixed-interest period. It can run to five figures — Section 489 of the German Civil Code (special termination right after 10 years) and selling the property are the most important exceptions.

Volltilgerdarlehen (full repayment loan)

A loan repaid in full within the agreed fixed-interest period. No follow-up financing needed — maximum planning certainty, often with an interest discount from the bank.

Z

Zinsbindung (fixed-interest period)

The period during which the borrowing rate is contractually fixed. Common terms are 10, 15, 20 or 30 years. A longer period means more certainty, but usually also a higher borrowing rate. Read more →