Mortgage comparison: how financing differs between German cities
To arrange bank financing for a property in a major German city, the bank does not need to be based locally — the comparison covers over 650 banks nationwide, regardless of the bank’s location or ours. Mortgage advice is also provided regardless of the bank’s location. Select your city.
How does mortgage financing in Frankfurt am Main differ from that in Cologne and Munich?
The difference lies not in interest rate levels, but in how individual banks factor in the location and condition of the property. When it comes to property financing in Frankfurt am Main, the highest concentration of banks does not automatically mean the best terms. Cologne ranges from ‘Gründerzeit’ and listed-building districts, which are viewed with scepticism, to unproblematic new-build locations, whilst Munich has tight loan-to-value limits coupled with high purchase prices.
Nationwide comparison: the property, its location and creditworthiness are the deciding factors, not the bank’s location
On a city-by-city basis, it is particularly worthwhile to make such a comparison where properties within the same city are valued very differently, for example in the case of ‘Gründerzeit’ or listed buildings. Details by city: Cologne, Frankfurt, Munich.
The difference lies in how banks factor in the location and condition of the property
It is not down to interest rates, but to how individual banks factor in the location and condition of the property: Cologne ranges from Gründerzeit and listed-building districts viewed with scepticism to unproblematic new-build locations (state funding (Landesförderung) available via NRW.BANK), whilst Frankfurt has the highest concentration of banks without necessarily offering the best terms, and Munich has tight loan-to-value limits coupled with high purchase prices. The difference only becomes apparent when comparing several banks.
What’s the best way to go about this in my city?
First, assess your own creditworthiness and the specific property, then approach several banks at the same time rather than one after the other — this allows you to compare which bank offers the most favourable valuation for the property in question. Regional funding schemes, such as those offered by NRW.BANK for Cologne, are worth considering in addition to bank financing, but they are no substitute for comparing different banks.
Mortgage comparison by city: why compare several banks?
Every city assesses locations differently, and comparing mortgages from several banks shows this. The advice is independent of the bank’s location.
The difference between the three cities rarely lies in the interest rate level itself, but rather in how strictly or generously individual banks factor in the location and condition of the property when setting their rates. In Cologne, this ranges from Gründerzeit and listed-building districts, some of which are viewed with scepticism, to unproblematic new-build locations — and NRW.BANK funding can further improve this situation.
Frankfurt has the highest concentration of banks, although this does not automatically mean that the local banks offer the best terms: national banks often value a property in Frankfurt differently to a local bank. Munich is one of the most expensive markets in the country — tight loan-to-value limits combined with high purchase prices mean that even small differences in the loan-to-value ratio can amount to several thousand euros in equity. In all three cases, this effect only becomes apparent when comparing several banks side by side, rather than looking at the offer from a single one.
That is why the same approach is worth following for all three cities: first assess your own creditworthiness and the specific property, then approach several banks at the same time rather than one after the other — this allows you to compare which bank values the property in question most favourably, rather than relying on the first offer you receive. Regional funding schemes, such as the NRW.BANK scheme for Cologne, can be considered in addition to bank financing, but they are no substitute for comparing different banks.
Cologne
A large, diverse market with neighbourhoods valued very differently — including properties from the Gründerzeit period and listed buildings. State funding is available via NRW.BANK.
Frankfurt
Just because a town is known as a ‘banking centre’ doesn’t automatically mean you’ll get the best terms from the bank round the corner — local and national banks weigh up the property, its location and creditworthiness differently.
Munich
One of Germany’s most expensive and, from a banking perspective, most challenging markets — tight loan-to-value ratios and high loan amounts make a genuine comparison particularly important.
Frequently Asked Questions
NRW.BANK.Home Ownership: How does state funding supplement financing in Cologne?
State funding via NRW.BANK is an option in Cologne in addition to bank financing and can help improve the situation. However, it does not replace the process of comparing banks. The procedure remains the same: first assess your creditworthiness and the specific property, then approach several banks at the same time.
Why does the financing differ from city to city when banks compare rates nationwide?
It is not down to interest rates, but to how individual banks factor in the location and condition of the property: In Cologne, this ranges from Wilhelminian-style and listed heritage districts, which are viewed with scepticism, to unproblematic new-build locations (where additional state funding via NRW.BANK is also available); Frankfurt has the highest concentration of banks without automatically offering the best terms; Munich has tight loan-to-value limits coupled with high purchase prices. The difference only becomes apparent when comparing several banks, not from the offer of a single one.
Does the bank providing the mortgage have to be based in my city?
No, you do not need a bank based locally to secure bank financing for a property in a major German city. The comparison covers over 650 banks nationwide, regardless of where the bank is based or where we are based.
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Editorially responsible: Olga Nikushkina — owner, §34i GewO (German mortgage brokerage), adviser register D-W-132-ZUCB-95. Specialised in German property financing with an international dimension: non-residents, foreign-currency income, cross-border workers, expats. Siegfried Perini is entered in the German intermediary register under this licence as a person directly involved in brokerage and advice (§ 11a GewO), active in real estate since 1992. Not legal or tax advice.
