The monthly rate is made up of 2 components:

• Interest payment (the cost of the home loan)
• Principal payment (decreasing amount of the mortgage loan)

Generally, the larger the down payment, the lower the interest rate of the home loan. This is because banks are risk averse, and the interest rate is partly calculated based on the risk that borrowers might not repay the mortgage. Therefore, a higher down payment would provide higher security for the bank to lend you a loan at a lower interest rate. Moreover, higher principal payment will also help you pay off your mortgage faster.

If you want to find out the maximum monthly rate you can afford quickly, you can use our mortgage calculator to get an answer in seconds. The mortgage calculator also shows you how much your real estate purchase fees would cost.

We understand that providing our customers a ballpark figure is a waste of their time, so we update our current interest rate daily by scanning through the whole German market. Yet, the eventual rate offered by the lender is influenced by a series of external factors. Moreover, mortgage rates vary from bank to bank in Germany since lenders calculate risks differently and the amount they are willing to lend vary from one bank to another. This is why a more detailed assessment with a mortgage broker is absolutely necessary.

The most important factors that influence how banks determine mortgage interest rates can be boiled down to three categories: financing, borrower's circumstances, and capital markets conditions. Firstly, the rate is usually calculated based on the risk that borrowers might not repay the loan. Therefore, if the down payment is low, which requires a higher loan amount and longer loan term, the interest rate will likely be higher. The property value also plays a role in determining your mortgage rate. For instance, if the value of your desired German real estate property is proportionately much higher than your down payment, which means you'd need a higher loan amount, this would also increase your mortgage interest rate. Therefore, it is important to carry out a real estate valuation to ensure that you are purchasing the property at the right value.

Secondly, your income, credit score, age and marital status also partly influence your mortgage rate. For instance, a higher credit score will typically result in a lower interest rate. And a higher household budget will also lead to a lower mortgage interest rate. Lastly, market performance also plays a role in influencing the current mortgage rates, since it affects the demand for loans.

Negotiating the best interest rate is important because even a small difference in your mortgage interest rates can affect the cost of your home loan by several thousands of dollars. But given the complexity of how the mortgage rate is determined, it's best to discuss with a mortgage advisor in order to secure the best rate that fits your personal circumstances. Most of our customers receive an in-depth recommendation within 24 hours after they have completed our online mortgage application. Alternatively, if you want a quick answer on your affordability, you can also check out the house loan calculator.

The most important factors that you can influence the interest rate are the length of the fixed term, the amount of your down payment and the selected property:

Fixed term: The longer the fixed term, the higher the interest rate and the higher costs you would incur. For instance, a 10-year fixed term usually has a lower interest rate than a 15-year fixed term. But if the interest rate was fixed for a longer period of time, the remaining debt would also be lower compared to a shorter fixed term.

Down payment: In general, if you put on a bigger down payment, mortgage lenders will likely offer you a lower interest rate. Banks calculate the interest rate after loan-to-value ratios. By increasing your down payment, you will also reduce the interest payment over the life of the mortgage. Personal contributions in the form of modernization work can also be brought in as own funds.

The selected property: The selected property's location, purchase price and valuation of the actual value by the bank - has a huge influence on the interest rate. The interest rate is essentially determined by the loan-to-value ratio. It sets the required loan in relation to the value of the property. The lesser the loan, the higher the equity, and the higher the property value, the better the interest rate.

• A 10-year fixed mortgage will result in a lower interest rate but interest rate could rise significantly after the end of fixed rate period, which results in a higher interest rate risk.
• The 20-year mortgage will have a higher interest rate but it has lower interest rate risk.

If you are not sure whether you want to choose a 10-year fixed or 20-year fixed mortgage, you can use our home loan calculator to find out how the length of loan term affects your monthly mortgage payment and interest rate.

It is possible to pay back the home loan faster than the schedule laid out at the beginning of the mortgage. These are the options available to you:

• Unscheduled voluntary payment: pay back 5-7% of the initial house loan at once. In general, many banks offer a voluntary payment once a year.
• Change the scheduled principal payment: Some banks allow you to change the principal payment up to 5 times during the fixed period of the mortgage loan.
• Pay off the home loan in lump sum:
  - If the house loan is fixed for up to 10 years, then you must pay a penalty fee. The penalty fee equals the amount of remaining interest payments.
  - If the loan is fixed for longer than 10 years, you can opt out with paying any penalty fee.

• Continue mortgage with the existing bank
• Switch and refinance mortgage with a new bank
• Pay off outstanding debt in lump sum

If your fixed term is longer than 10 years, yes. If the borrower has agreed on a fixed-interest period of more than ten years, under the German law, you can cancel the contract unilaterally at any time after the expiry of the ten-year period.

But if it is shorter than 10 years, you would have to pay a penalty fee, which is the cumulative interest payments due for the rest of the mortgage, and administrative charges. Thus, the bank would be compensated with the contractually guaranteed interest rate payments, as a result of the premature termination of the mortgage agreement.

For instance, if your rate period is fixed for 10 years and you want to sell the property 5 years after you buy property in Berlin, you would owe the bank the remaining interest payments due for the fixed rate period.

The monthly mortgage rate will increase. Depending on how far interest rates in Germany have increased, the monthly mortgage repayment rate might increase substantially. A longer fixed rate period will allow you to repay at the initial interest rate for a longer time, and thus, you would get more security in case the interest rate increased significantly. But your mortgage interest rate would also be higher if you opt for a 20-year instead of a 10-year fixed mortgage rate period. This is why it’s important to consult a mortgage broker in order to find the right home loan plan that fits best with your personal and financial situation.