“As a matter of principle we do not finance clients living in the Netherlands.”
With this sentence the meeting ended faster than expected.
Information
After months of searching, an entrepreneur from the Netherlands had decided on a high-quality flat in Düsseldorf. The property was in a sought-after location, let long-term, and was to become part of his retirement provision.
Sufficient equity was available.
The company had been writing stable profits for years.
Private liabilities were practically non-existent.
A client, in fact, that any bank ought to want.
But within a few days he received two rejections.
Not because of the property.
Not because of his company.
Not because of his creditworthiness.
But solely because of his residence.
The starting position
The entrepreneur had run a successful family business in the Netherlands for more than fifteen years. Germany was not an unknown market to him. Many of his clients were in the Rhineland, which is why he regularly travelled to Düsseldorf on business.
By buying the flat he wanted to invest part of his assets outside the company.
The key figures:
- Purchase price: 498,000 euros
- Equity: 168,000 euros
- Financing required: 370,000 euros
The flat was already let and generated regular rental income.
Why the first banks rejected
The first bank reviewed the enquiry only superficially.
The rejection came after just a few days.
Reason:
Residence outside Germany.
The second bank went a little further.
It requested additional documents about the company.
After a week, however, a rejection followed here too.
This time the internal reasoning was:
- foreign company seat
- missing standard processes
- increased review effort
For the entrepreneur this was barely comprehensible.
His company had been generating profits for years.
The equity ratio was high.
The property itself represented a low risk.
What many entrepreneurs underestimate
Even economically strong self-employed people regularly encounter difficulties with cross-border financings.
Not because banks distrust them.
But because international company structures are considerably more involved to review.
Unlike with a German employee, the following often have to be assessed in addition:
- annual accounts
- company development
- shareholder structure
- private asset situation
- tax particulars
- income withdrawals
Many banks forgo this effort.
Others specialise in it.
That is exactly where the difference lies.
The analysis
Before submitting the documents, the overall economic situation was assessed first.
An exceptionally solid picture emerged.
The company had been generating stable profits for years.
The equity ratio was above average.
Private reserves were available in sufficient amounts.
In addition, the entrepreneur already held several let properties.
The Düsseldorf flat was convincing too.
The location was sustainably lettable.
The rent covered a considerable part of the financing costs.
The decisive change
Instead of enquiring at random with further banks, an institution was deliberately selected that regularly finances international entrepreneurs.
All the particulars were explained even before the actual credit review.
The bank received not only figures.
It received the entire economic background.
Why was the investment made?
How did the company develop?
Which assets were available?
What did the long-term strategy look like?
This produced a complete picture.
The financing commitment
After the economic review, the entrepreneur received the commitment.
The financing was concluded with a long-term fixed-interest period.
Part of the equity was deliberately kept as a liquidity reserve.
The notarial deed followed just a few weeks later.
The flat remained let and became an important part of his private asset planning.
What this case shows
International entrepreneurs often experience the same situation.
The first or second rejection by no means means that financing is impossible.
Often the credit profile simply does not fit the internal policies of the bank enquired at.
Self-employed people living abroad in particular benefit when banks have experience with international company structures.
Frequently asked questions
Can entrepreneurs living in the Netherlands finance property in Germany?
Are foreign companies accepted?
Are higher equity ratios required?
Do the annual accounts have to be translated?
Can further investment properties be financed too?
Conclusion
This case shows that international entrepreneurs often do not fail because of their creditworthiness, but because of the lending guidelines of individual banks.
Anyone who selects the right financing partners and documents their economic situation comprehensibly can successfully invest in German property even while living in the Netherlands.
Not every bank finances international entrepreneurs.
The right bank, however, often makes the decisive difference.
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