27.09.23
Creative ways of financing property – The apartment is in Austria, but the loan comes from Germany
The lending rules in Austria are stricter than in Germany, which is why apartment hunters also ask around at banks in the neighbouring country – or get creative in other ways.
The dream of owning a home is currently being shattered. Not only by the high real estate prices in many places, but also by the necessary financing.
For a good year now, stricter rules have been in force regarding the necessary equity capital and the monthly loan installment. Banks do have financing quotas, but these are quickly used up. Anyone who wants to finance their dream of owning their own home will have to get creative.
Austria- German Border
For this reason, the more sophisticated have increasingly been knocking on the door of German banks. This is because they are less strict in granting loans. The debt service ratio may be higher there than in Austria – and German banks also have more leeway in terms of maturity. However, with Germany, more financial documentation is required. And therefore higher costs – such as processing fees – may be incurred.
There are no figures on how many people go to Germany for financing, says Franz Rudorfer, managing director of the Banking and Insurance Division at the Chamber of Commerce. He does not see a “huge problem” at the moment, but it is a “thorn in the flesh” for domestic banks.
In the beginning, the demand for loans from German banks was more in the area close to the border with Austria. In the meantime, word seems to have spread about this option. Hansjörg Lenz, managing director of real estate agency Engel & Völkers in Kärnten, says that “everything” is currently financed via Germany. Then the loans are brokered by a service provider from Austria.
At the brokerage firm Örag, one does not notice a run on German loans. “Most people want to stay in Austria, for loans” says Jelena Pirker, head of the residential property division. Often, however, one has to “give customers confidence” when the first financing rejection comes.
Legally, the loan from Germany is not a problem. Andreas Ederer of the comparison platform Durchblicker nevertheless advises to think things through carefully. In the event of insolvency, the place of jurisdiction is still Austria. But for other disputes it may be Germany – you need a German lawyer, and German consumer protection regulations apply.
Creative ways of financing property
Creativity also exists among home seekers other than seeking German loans. Pirker notices that, in view of stricter regulations regarding the amount of equity, “groups of future heirs” are forming in families!
Grandchildren, for example, can get an inheritance paid to them way ahead of time. For this Grandma and Grandpa look to invest and also go to the property viewing. They are well informed – and enthusiastic about a new property investment. For this the older generations would not only increase their own capital equity funds, but often find another bank advisor, who can help further with the credit.
And at the end, the entire family comes to the purchase completion and handover of the keys. (Franziska Zoidl, )
Source: Der Standard – translated from the German
Image by Andreas Breitling from Pixabay