Buying a property is a life-changing decision for many people. Whether for personal use or as an investment in the future, first-time buyers have a lot to think about and consider. Find out here how you can be optimally prepared before, during, and after the purchase.
Before purchasing
First, you need to calculate carefully and make some fundamental decisions. What monthly payments are you willing to make? What additional costs might you incur when purchasing? What additional investments would you like to make in the property? How much equity do you have? What one-time costs and ongoing costs will you incur?
In addition to the purchase price, one-time costs include notary fees, real estate transfer tax, real estate agent and appraiser fees (if applicable), and any renovations or other investments. Ongoing costs to be taken into account include monthly loan repayments, operating costs, but also expenses for insurance such as building insurance, natural hazard insurance, and annual property tax.
Check whether your building society savings or Riester pension plans offer attractive terms for a loan, include any equity you may have in your calculations, as well as possible special repayment options and interest rates, but also relief and potential subsidies. These include the employee savings allowance, KfW subsidies, home ownership subsidies, child building allowances, but also housing construction premiums, capital-forming benefits, and Wohnriester. Many of these subsidies are specifically aimed at young families and are designed to help as many people as possible take the important step of buying their first home.
You should also be aware of tax breaks such as declining balance depreciation and factor these into your budget. Some consumer advice centers offer independent, free financial advice and can help you review your strategy before you go to your bank.
Once you have developed a solid financing strategy, your bank can then support you with budget advice and assess whether the loan amount and agreed repayment instalments are feasible. Once your credit rating has been successfully checked by SCHUFA, you will receive a financing commitment from your bank. Most sellers require the financing commitment or proof of equity in order to proceed with the sale, as this proves your solvency.
The right property
It makes sense to first look into the financing options available to you and then search for the right property. This allows you to inquire about the right property right away, taking your individual needs into account.
Now it's time to think about what you want. City or country? Investment property, condominium, or single-family home? Renovated old building or energy-efficient new construction? What is important to you in terms of infrastructure, location, and surroundings? Is there a kindergarten, a supermarket, public transportation, good connections to the highway and surrounding area? Does your dream property offer modern e-charging infrastructure, thermal insulation, or energy concepts?
During the purchase
You will find important information about your desired property in the building specifications. Information such as the exact floor space calculation, the year of construction, detailed floor plans, plans, and a current energy performance certificate can also be obtained from your developer or seller.
If you purchase your property directly from the developer or through a real estate agent, the Real Estate Agent and Developer Ordinance applies. Here you agree specifically which payments you as the buyer can make and at what intervals. The regulation primarily serves to protect the buyer, for example because a condominium is still under construction. It stipulates that payments made by the buyer to the developer may only be used for this property and is also based on the progress of construction.
At the notary
You will receive a draft of the purchase agreement from the notary at least two weeks before the notary appointment. This gives you enough time to go through all the details again at your leisure. At the same time, the notary will take care of a so-called land charge registration. This means that the notary applies to the land registry office for the necessary entry. The land register, an official register, records who owns a property, how much it is encumbered, and what other rights or obligations exist. It is important to check the land register entry carefully. Any debts (land charges) are recorded here, as are any rights of third parties (e.g., a right of residence or right of way), known as easements.
Once the land register entry has been made, the purchase agreement has been drawn up, and the financing has been clarified, it is finally time to go to the notary. As part of the notarial certification, the purchase agreement is signed by all parties to the contract. You will arrange the registration of the land charge together with the notary after the notarization. You will need a valid ID document such as an identity card or passport to visit the notary.
After purchase
You should be present in person when handing over your first property and also record the handover. Now, finally, you have the keys in your hand. Before paying the full purchase price, you should always wait for the purchase price due notice from the notary. This is a prerequisite for the purchase price to be paid as intended. You can then begin making monthly repayments once the purchase price has been paid in full.
Now is also the right time to review your insurance policies and contracts and switch to cheaper providers if necessary. Don't forget to set aside reserves for maintenance and unforeseen costs.
If you have purchased a condominium, get in touch with the homeowners' association (WEG) at an early stage. You can also request minutes of past meetings to get an overview of current issues in the building. Now nothing stands in the way of happiness in your own four walls.
