Permanent Residence Permit Holders

finbird advises permanent residence permit holders on their mortgage options to buy properties in Germany.

The Permanent Residence Permit

finbird supports professionals with a permanent residence permit, also known as a Niederlassungserlaubnis, as well as EU and EFTA citizens with mortgages to buy properties in Germany. We provide comprehensive advice in German and English and specialize in client situations with permanent residence status and a foreign background.

Mortgages With A Permanent Residence Permit

The EU long-term residence permit or a permanent residence permit (equivalent to a residence permit of unlimited duration) allows you to live and work in Germany for an unlimited period of time. This permit is issued under certain conditions, e.g. after a certain period of residence, if you can prove a secure livelihood and sufficient knowledge of the German language.

A permanent residence permit implies that the financial situation and commitment of foreign nationals in Germany have been verified. This means that these potential borrowers may pose a lower risk from a lender's perspective than those borrowers whose residence status is unclear. This classification usually applies to international professionals with a permanent residence permit in Germany, a permanent EU residence permit, or EU or EFTA citizens (Iceland, Liechtenstein, Norway and Switzerland). With these residence permits, borrowers benefit from simpler solvency evaluations and potentially better financing conditions, since lenders classify these profiles as less risky. From the point of view of lenders, borrowers with a permanent residence permit, are less likely to leave the country which would mean they would be at risk to no longer be able to reliably service a mortgage over the long term.

Unlike temporary residency permits such as a work, research or family-reunification visa, a permanent residence permit indicates to lenders that the borrower is more likely to be able to remain in the country long-term, which can positively impact their borrowing capacity and likelihood of loan approval.

As a rule, similar financing options are available to EFTA and EU citizens or persons with an EU permanent residence permit as to German citizens or persons with a permanent residence permit. EFTA or EU citizens or persons with an EU permanent residence permit benefit from the fact that their income and assets can be verified across borders within the EU, which can lead to faster approval times and better credit options.

Financing Cases

A client from New Zealand with dual citizenship (Iran) had difficulties obtaining German Mortgages. This was due to increased KYC (Know Your Customer) and legitimization requirements. The case was re-evaluated with a specialist lender, focusing on the client's long-standing permanent residence in Germany and the stability of his employment and income situation. This re-evaluation led to a successful loan approval and attractive terms from a lender.

An Italian citizen wanted to buy a home with his non-European spouse. Different requirements from lenders due to the applicants' different residence permits complicated the loan approval process. The case had to be thoroughly prepared for a mortgage application, while focusing on the EU citizenship of the main applicant. The financing was structured so that both individuals were named as borrowers, and the wife's non-permanent residency status was no longer an issue.

A Swiss IT professional planned to move his workplace and residence to Germany and buy a home there. Initially, he had difficulties obtaining favorable financing terms due to his foreign domicile and because he earned his salary in CHF (Swiss francs). The case was re-evaluated as part of a comprehensive consultation, with a focus on the planned change of domicile and the borrower's Swiss citizenship. This enabled the borrower to obtain appropriate loan terms and a successful loan approval from a financing partner.

FAQs

What are the advantages of a residence permit like the permanent residence permit?

Many banks generally consider the residency situation of individuals with a permanent residence permit, a long-term EU residence permit, or who are Efta or EU citizens to be less risky. This long-term residency perspective gives lenders more confidence in the sustainable ability to service loan obligations, which can often lead to better conditions and higher possible financing volumes.

How does a permanent residence permit affect the granting of credit?

A permanent residence permit or an EU long-term residence permit can speed up the loan approval process for real estate financing, as the lender's risk assessment is lower and there are fewer concerns regarding the residence status. This can shorten processing times and improve conditions for borrowers.

What documentation applies to borrowers with a permanent residence permit?

Typical documents include proof of a permanent residence permit, most recent tax returns, proof of income, bank statements and the applicants' credit history. Also relevant property documents such as land registry extracts, floor plans and home floor space calculations.

Do EU citizens need a special visa to buy homes in Germany?

No, EU citizens do not require a special visa to purchase property in Germany. As an EU citizen or foreign investor, you can buy and own property in Germany without any additional formalities. However, when it comes to financing a property purchase, your residence status is relevant, i.e. whether it is a temporary or permanent permit or whether you have a place of residence in Germany or abroad.

Can EU citizens take out a German mortgage without German citizenship?

Yes, EU citizens can take out a mortgage in Germany even without German citizenship. However, banks may require additional documentation to verify the income and assets of applicants within the EU in such cases. If an EU citizen living in one European country wants to buy a home in Germany but does not receive a salary in euros, this can make it more difficult to obtain a mortgage, as the legal situation for banks is more complex and sometimes even unfeasible when it comes to income in different currencies.

What are the challenges for foreign buyers when purchasing a home, despite having a permanent residence permit?

With permanent residency, a borrower has many advantages and is treated similarly to local loan applicants. However, expatriate buyers still face challenges, such as familiarizing themselves with local financing and real estate practices or understanding contractual rules and legal texts in German. We at finbird provide comprehensive support to our customers in this area.

Can a borrower with a permanent residence permit receive 100% financing?

Generally, there are fewer lenders offering 100% financing, regardless of an applicant's status, but purchase price financing is also possible under certain circumstances. In this case, the value of the home is an important factor, as is the ability of an applicant to service higher loan payments with their income. In general, however, borrowers must expect higher interest rates for 100% financing than if more equity is contributed to the financing.

What if my income is not in euros?

If you receive your income in a currency other than the euro, your loan installments will be subject to currency fluctuations. In addition, under EU Directives, consumers have additional rights that allow them to convert a loan taken out in euros into their home currency. Such situations increase the risks and the effort for banks and lenders, which is why there are usually fewer banks available to provide financing for many such constellations and sometimes no financing is possible.

Financing Process

Our financing process for foreign professionals with a permanent residence permit, for Efta and EU citizens or for persons with a permanent EU right of residence is tailored to the different needs of the individual target groups. We are familiar with the respective criteria of banks and lenders for the different residence situations and clarify all possible financing options for your specific situation so that you receive the best possible credit conditions for your property purchase. We support you in selecting the appropriate financial products, take over communication with the banks and accompany you through the entire financing process until the contracts are signed and even beyond.