Aiming for homeownership? We've got some strategies to help you make your dream a reality.

Cracking the Code: Achieving Home Ownership in Germany

Yearning for a dwelling?

Nabbing that ever-elusive dream home is still a desired goal for many young German folks. According to a survey by Forsa, commissioned by the German Real Estate Association, an eye-watering 80% of 18-44-year-olds wish to own their own place. But the execution often falls short, thanks to skyrocketing real estate and construction prices, financing interest rates, and a lack of equity and income.

The reason for our hunger for four walls? It's all about our psyche. Our well-being demands security, stability, and control over our immediate environment. As psychologist Michael Alexa explains, "The home embodies this deeply rooted longing." It's also a symbol of status and success. Rentals just don't cut it.

But owning a home wasn't always a cakewalk. In the past, it meant saying goodbye to luxury dinners, elaborate hobbies, and numerous vacations annually. Instead, people compromised to save up for their castle.

Homeownership: A Desirable, Yet Shifting Aspiration

However, times they are a-changin'. Alexa notes a growing trend - a crumbling of the traditional homeownership pattern. And it's reflected in the findings of a study by the Munich Schoerghuber Group, which show that younger people predominantly prefer to rent and maintain mobility.

Alexa encourages those aiming for homeownership to be honest about their motivations and life plans: "Understand if you really want it or if you'd rather focus on beautiful travels, professional opportunities abroad, or reconsider alternative housing options." Don't forget about the maintenance work needed for a house and garden, too.

Boost Your Financial Reserves

Fear not, for those determined to own, the equity hurdle isn't an insurmountable obstacle. Here are some tips to help close financing gaps with minimal effort:

Tip 1: Maximize your building society contract - turn it into a money-maker! Banks typically grant loans up to 80% of the already saved balance. If your building society contract has been saved for some time, consider taking out a small loan on it. The amount could run into the tens of thousands, depending on your contract. Just remember, no additional security beyond the building society contract is required.

Tip 2: Parental land registers can work to your advantage. Use your parents' paid-off property with a land charge entry to boost your loan. Transferring this entry acts like equity in the eyes of the first-financing bank, saving you costs for a new land charge. But remember, parents are also liable if the financing fails.

Tip 3: Don't forget to check your Riester contract. Withdraw funds to purchase or build a self-used property, tax-free. This option is used rarely, as few people think about it.

Tip 4: Shop around for the best bank. Each bank has its own criteria for evaluating equity, so compare offers intensively. You could save up to one percent in interest!

Tip 5: Reach out to your network - family, grandparents, or siblings might be able to help.

Tip 6: Creative financing strategies: combine these tips, tailored to your individual situation.

Activate Personal Levers

When banks calculate your income, they often use flat rates for living expenses and ancillary costs. These rates vary between banks. With a financing certificate, you prove your creditworthiness and get a luckier chance with brokers and sellers. Obtainable online at many credit institutions, the certificate enhances your chances of viewing appointments and makes you more attractive to brokers.

To get an edge in the hunt, establish early contacts with brokers to get a heads-up on listings.

Smaller is Sometimes More

Opting for the pre-existing housing stock rather than new construction can be advantageous, especially when it comes to properties with renovation backlog. The purchase price is often negotiable, and the basic level can be elevated step by step as your finances allow. When renovating, leverage your connections - friends and family can help reduce costs through DIY and muscle mortgage. Remember, you don't have to aim for high-end level. A rental-apartment quality home can still satisfy your needs.

In new construction, the living space generally consumes the most money. Cut back here, and you might secure the financial boost you need. Or get creative: consider building groups for families, tiny houses for singles, or relocating to the provinces and bartering with senior citizens who are open to change.

In the pursuit of homeownership, it's essential to consider the lifestyle one desires, as the growing trend shows a shift towards mobility and renting among younger people.
Navigating the world of finance is crucial in achieving homeownership, and creative strategies such as optimizing building society contracts, using parental land registers, and checking Riester contracts can help bridge financing gaps.
A financing certificate, proving creditworthiness, can be a game-changer in securing a home, especially when competing against other potential buyers. Additionally, exploring smaller home options or building groups can offer an affordable entry into the real estate market.