When the third rejection came, the couple no longer believed in a financing
When Mr and Mrs M. found their dream flat in Düsseldorf, they were convinced they had already put the hardest part behind them. For almost ten years they had lived on the Spanish Costa Blanca, working there successfully and building up solid assets. The flat in Germany was not to be a holiday home, but a long-term investment for their retirement.
Information
Equity was available. Both had permanent employment contracts. There were no negative SCHUFA entries, no ongoing loan defaults and an excellent household budget.
Even so, they received three rejections within a few weeks.
Not because of their creditworthiness.
Not because of the purchase price.
Not because of a lack of equity.
The only reason given was: residence in Spain.
The starting situation
Mr M. works as a technical project manager at an international company based in Alicante. His wife is a commercial employee at a Spanish trading company. Both receive their income in euros and pay tax on it fully in Spain.
For their retirement provision they want to acquire a let flat in Düsseldorf.
The key financing figures:
- Purchase price: 425,000 euros
- Transaction costs: around 42,000 euros
- Equity: 110,000 euros
- Financing required: 357,000 euros
The property is in a sought-after residential location with good lettability and long-term stable prospects.
A financing, in fact, that appears unproblematic at first glance.
Why their own bank rejected
The couple addressed the first enquiry to the bank where both had held their accounts for many years.
Hopes were high, after all there was a long-standing client relationship.
The answer came surprisingly quickly.
A financing was unfortunately not possible because of the tax residence abroad.
There was no further explanation.
Two further banks also rejected the application after a pre-check.
Some institutions do not finance non-residents on principle.
Others require conditions that could not be met in this specific case.
For many applicants this creates the impression that financing in Germany is fundamentally ruled out with a residence abroad.
That, however, is not true.
The real problem did not lie in creditworthiness
The detailed analysis quickly showed that neither income nor asset situation gave cause for concern.
Internal lending guidelines were decisive instead.
Many banks have standardised processes designed for clients living in Germany.
As soon as income, tax liability or residence move abroad, the review effort rises considerably from these institutions' point of view.
This includes, among other things:
- reviewing foreign income statements
- assessing tax particulars
- additional documentation obligations
- internal risk-management rules
- differing requirements on equity and lending value
The consequence: a blanket rejection is not uncommon, even though the economic conditions are excellent.
The strategy
Instead of making further financing enquiries at random, it was first checked which banks regularly handle financings for Germans living in Spain.
Before submitting the documents, all the particulars were presented transparently.
These included:
- income structure
- tax residence
- an asset overview
- proof of equity
- property documents
- a household budget
This gave the financing institution a complete picture of the economic situation from the outset.
After the pre-check, positive feedback followed.
A few days later the financing commitment was in place.
The financing concept
The financing was designed for long-term stability.
Besides the available equity, sufficient liquidity reserves were kept in order to cope easily with future maintenance or unforeseen expenses.
The expected rental income was included in the overall assessment too.
The result was a sustainable financing that met both the bank's requirements and the couple's long-term goals.
What other Germans abroad can learn from this case
A residence in Spain is not an exclusion criterion for a property financing in Germany.
What is decisive, rather, is whether the bank enquired at has experience with international financings.
Many applicants lose valuable time through rejections from institutions whose internal guidelines fundamentally do not provide for such financings.
Anyone who selects the right financing partners from the outset and prepares their documents completely considerably improves the prospects of success.
For non-residents in particular, it is often less the interest rate than the financing bank's experience with cross-border matters that decides.
Frequently asked questions
Can I finance a property in Germany while living in Spain?
Does my income have to be earned in Germany?
How much equity is needed?
Are German accounts required?
Does processing take longer than a standard financing?
Conclusion
This case shows that a rejection by individual banks does not mean that a financing is fundamentally impossible.
For Germans living in Spain in particular, banks' lending guidelines differ considerably. While some institutions rule out such financings on principle, others have many years of experience with international income and tax situations.
Anyone who relies early on specialised financing partners and prepares their documents professionally can successfully invest in German property even while living abroad.
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