Understanding German Mortgages
German mortgages (Baufinanzierung) have some unique features:
- Annuity Loans: Most loans are annuity loans, meaning you pay a fixed monthly installment (the 'Rate').
- Tilgung (Amortization): This is the percentage of the principal you pay off in the first year. A higher Tilgung means you pay off the loan faster. 2% is a common starting point.
- Fixed-Rate Periods: Mortgages are typically fixed for a set period (Sollzinsbindung), often 5, 10, or 15 years. After this period, the loan must be refinanced at current market rates. This calculator shows your initial monthly payment during the fixed-rate period.