Property value at the bank: why does it lend on less than the price?
You pay the agreed price — and the bank still calculates with less. That is not an error, it is the rule. Since 2025 banks have had to value more conservatively, and the value they lend against often sits below what you pay. What that means for your equity, and how the gap gets closed, is set out here.
Does the bank lend against the property value or against the purchase price?
The bank lends against the property value, not the purchase price, and the gap comes from your equity. The lending value is the value the bank assigns to the security; since 2025, CRR III and the EBA Loan Origination Guidelines have required a more conservative valuation. It typically sits 10–20 % below market value.
Purchase price vs. bank value: why do the two differ?
The purchase price is what you pay, while the lending value is the value the bank assigns to the security. It typically sits 10–20 % below market value, and the difference has to come from your own funds.
- Why does the bank calculate with less than the price? The purchase price is what you pay; the lending value is the value the bank assigns to the security. Since 2025, CRR III and the EBA Loan Origination Guidelines have required a more conservative valuation — the value lent against often sits below the price. How the lending value is derived.
- How far apart are the two? The lending value typically sits 10–20 % below market value. For a let property the gap can be far wider, because there the income value caps the figure and has to be capitalised at a minimum of 5.5 %. The difference has to come from your own funds. Run the numbers yourself.
- What does that mean in practice? Settle the lending value with the bank before the purchase contract, not after. Terms are tiered by loan-to-value; with strong credit standing banks are more flexible, and some accept up to 100 % of the property value.
Why does the bank lend on its property value rather than the full purchase price? Because the bank lends against a prudent property value, and that figure answers a different question from the purchase price. The purchase price is what you pay today.
The lending value is what the bank expects the property to be worth over the whole life of the loan, with market peaks stripped out — § 16 (2) of the German Pfandbrief Act rules out speculative elements outright.
Since 1 January 2025 Article 229 CRR III has removed the choice between market value and lending value for capital purposes: banks must apply a prudent value that excludes expected price increases.
Two routes are recognised — the lending value under the BelWertV, or the market value with a deduction.
For a let property the income value governs under § 4 (1) BelWertV and may not be exceeded, and it is capitalised at a minimum rate of 5.5 % (§ 12 (4) BelWertV).
The gap you have to close with equity comes from that rule, not from any doubt about your purchase.
The purchase price is what you pay. The lending value, or property value, is the value the bank assigns to the security. The two often differ considerably — and since CRR III took effect in 2025 that gap has widened.
The EU banking rules CRR III and the EBA Loan Origination & Monitoring Guidelines tightened valuation requirements in 2025. Banks today have to value markedly more conservatively than they did in 2020.
Property value, market value, lending value: Market value: the realistic value at the valuation date — broadly the price being paid today. Lending value (Beleihungswert): the value that holds over the long term — typically 10–20 % below market value.
Property value (CRR III): since 2025 the only value concept that counts for capital purposes. It is not a third, still lower figure but a requirement a value has to meet.
The German lending value under the BelWertV meets it in every case, according to the national supervisor; alternatively the bank takes the market value and applies a deduction.
What did CRR III change in 2025?
CRR III (Capital Requirements Regulation 3) has applied in Germany since January 2025. It requires banks to value property collateral more conservatively:
- No more choice: the former option between market value and lending value has gone. Article 229 CRR III prescribes a single prudent value concept for capital purposes. No expected price increases: anticipated growth may not be built into the value.
- Market value as the ceiling: the property value may never exceed the market value, and it is adjusted downwards where the market value sits well above what is sustainably achievable over the life of the loan (Art. 229 (1)(b) CRR III).
- It reaches follow-up financing too: even where market prices have risen sharply, the bank works with the prudent value, not the peak.
- What it means for you: Your loan-to-value is higher than you think: a property at a price of €400,000 may carry a property value of only €340,000 — and the ratio is calculated against the lower figure.
- More equity, or a rate premium: at 80 % of €340,000 the loan tops out at €272,000, instead of €320,000 against the price. Terms are tiered: 60 % buys better terms than 80 % — and against a property value you cross those lines sooner.
What follows in practice
Settle the lending value with the bank before the purchase contract. A fresh valuation on a follow-up financing can push your ratio up, and a price close to the top of the market makes a deduction more likely.
Settle the lending value with the bank before the purchase contract, not after. On a follow-up financing, a fresh valuation can push your ratio up even though you have been repaying. A price close to the top of the market makes a deduction more likely. With strong credit standing banks are more flexible; some accept up to 100 % of the property value.
Which figures in a listing actually carry the valuation, and which are just advertising, is covered under how to assess a property before you bid.
You can run your own property through the lending value calculator — both routes recognised since 2025, side by side. There is also a briefing note to take away: how banks calculate the value of your property.
Property value CRR III: what changed for lending in 2025
Since January 2025 CRR III requires banks to value property collateral more conservatively.
The former choice between market value and lending value has gone, and Article 229 prescribes one prudent value concept. Expected price increases may not be built in, and the value may never exceed the market value. This applies to follow-up financing too.
Property value bank: how the lending value is set
The lending value is what the bank expects the property to be worth over the whole life of the loan, with market peaks stripped out; § 16 (2) of the Pfandbrief Act rules out speculative elements.
It typically sits 10 to 20 % below market value. For a let property the income value governs under § 4 (1) BelWertV and is capitalised at a minimum of 5.5 %.
Frequently asked questions
Why does the bank calculate with less than the price?
The purchase price is what you pay; the lending value is the value the bank assigns to the security. Since 2025, CRR III and the EBA Loan Origination Guidelines have required a more conservative valuation — the value lent against often sits below the price.
How far apart are the two?
The lending value typically sits 10–20 % below market value. For a let property the gap can be far wider, because there the income value caps the figure and has to be capitalised at a minimum of 5.5 %. The difference has to come from your own funds.
What does that mean in practice?
Settle the lending value with the bank before the purchase contract, not after. Terms are tiered by loan-to-value; with strong credit standing banks are more flexible, and some accept up to 100 % of the property value.
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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.