A conversation at the kitchen table can sometimes shed more light on things than hours of online research. This was certainly the case during our Kartheuser Kitchen Chat with mortgage expert Michael Meier. For over 20 years, he has been helping people on their journey to homeownership—with independent advice, a large network of banks, and a clear goal: to find the best possible financing for his clients.
Let’s take a look together at the most important questions surrounding mortgage financing—in a practical, understandable way, with a touch of real-world applicability.
Watch the video here:
A mortgage isn’t a sprint—it’s a marathon. It needs to fit into your life over the long term—both today and 30 years from now. But how does a mortgage actually work?
You’ve found your dream home. Now the question is how to finance this dream. Unlike a traditional installment loan (e.g., for a car), a mortgage involves large sums—often several hundred thousand euros. These are repaid over decades. To help you keep track of everything, these terms are particularly important:
- Fixed-rate period
You determine how long your interest rate remains unchanged—typically 10, 15, or 20 years. Longer terms give you more security because your monthly payment doesn’t change—but they usually cost a bit more in interest. - Principal repayment
This is the portion of your monthly payment that actually reduces your debt. Standard: 2% per year. Higher principal payments mean: getting out of debt faster—and paying less interest overall. - Outstanding balance
At the end of the fixed-rate period, there is usually an outstanding balance that you can either refinance or pay off directly. Important: Plan your follow-up financing in good time! - Interest rate risk
After the fixed-rate period ends, the interest rate may rise—no one knows how high interest rates will be in 10, 20, or 30 years. Life changes (job changes, parental leave, divorce) also affect your financial situation—you should take this into account from the very beginning. - Right to make extra payments
Many banks allow you to make additional repayments of up to 5% of the original loan amount per year—voluntarily, not mandatory. This allows you to reduce your debt flexibly if, for example, you receive bonus payments or inheritances. - Early termination
If you have chosen a fixed-rate period longer than 10 years (e.g., 15), you, as a customer, have a special right of termination vis-à-vis the bank. This is regulated in Section 489 of the German Civil Code (BGB) and states that you can terminate your loan at any time 10 years after full disbursement with a notice period of 6 months. Of course, the bank cannot do the same to you, and you should only do this if you have previously found and been approved for alternative or better financing.
Nominal interest rate, effective interest rate – what do they mean?
Confused about interest rates? No wonder. The terms “nominal interest rate” and “effective interest rate” appear in every financing offer—and sound pretty technical at first glance. But the difference is easy to explain:
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Nominal interest rate: This is the “pure” interest rate the bank charges for your loan. This interest rate, combined with your principal repayment, calculates your monthly payment, i.e., your annuity. Example: You borrow €100,000, and the nominal interest rate is 3%. This means you pay €3,000 in interest per year, or €250 per month. Add to that your principal repayment—e.g., 2% (€166.67 per month). In total, you pay €416.67 per month.
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Effective interest rate: Additional costs are added here that are inevitably incurred with a mortgage, such as the land registry entry for the mortgage lien (which serves as security for the bank), notary fees, court costs, and in some cases the requirement for home insurance. Even though these costs do not go directly to the bank, it must factor them into the effective interest rate. The effective interest rate is therefore always slightly higher than the nominal interest rate and expresses the total cost of financing as a percentage.
Important to know: The effective interest rate is intended to ensure transparency and make different offers comparable. In practice, the difference between the two interest rates is usually small.
Michael Meier advises: “The nominal interest rate is often sufficient for comparison purposes, as reputable banks rarely have hidden costs. Of course, if you want to know exactly where you stand, you can also look at the effective interest rate—especially for more complex financing arrangements or combined products like home savings plans.”
A tip: For traditional home loans without extras like home savings plans, the nominal interest rate is a reliable indicator of your monthly payment—and thus crucial for your budget planning.
How can I influence the interest rate?
The good news: You can actively help shape your individual interest rate. There are various factors you can adjust to positively influence your interest rate:
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More equity:
The lower the loan amount relative to the property value, the better the terms. Rule of thumb: The less you borrow, the less interest you pay. Important: Don’t spend it all—3–5 months’ net salary should be kept as a reserve for unforeseen expenses. -
Faster or higher principal payments:
If you’re willing to choose a higher repayment rate, many banks will offer an interest rate discount—and you’ll be debt-free sooner. -
"Green discount" for energy-efficient properties:
If you buy a property with a particularly good energy rating (e.g., primary energy demand below 50), banks may grant an interest rate bonus. Such ESG or eco-criteria are increasingly being promoted—and pay off twice: through savings on energy and financing.
How are interest rates trending?
Interest rate trends are currently marked by considerable uncertainty. Although the European Central Bank (ECB) is cutting key interest rates in some cases, mortgage rates are rising noticeably—even in the short term. Despite the expected ECB rate cut, the market is reacting nervously. Government special funds and rising public debt are acting as a catalyst. The DAX, Germany’s most important stock index, rose significantly—a sign that the market is anticipating high levels of investment and, consequently, rising interest rates.
For anyone looking to buy, this means: Secure your financing early, before interest rates rise further. In the medium term, Michael Meier expects interest rates to stabilize at 2–4%.
Our tip: Calculate your financing so that you could handle an interest rate of 4%. Combined with a 2% principal repayment, this results in an annual payment—your annuity—of 6% of the loan amount. Example: For a loan of €300,000, that would be €18,000 per year or €1,500 per month. Calculating this way helps you stay on the safe side—even if interest rates rise in the future.
Extra Payments, Home Savings Plans, and More
Flexibility is key. Many banks offer the option of making special payments of up to 5% of the loan amount each year. This means you can pay back more, but you don’t have to.
What about home savings contracts? They can be a good way to lock in low interest rates for the long term. Michael Meier recommends: “A home savings contract only makes sense if it fits into your overall financial plan and you can realistically save toward it.”
Example: You take out a €100,000 loan and know that after 10 years, €70,000 of the debt will remain. To protect yourself today against potentially rising interest rates in the future, you could simultaneously set up a home savings contract for €70,000. This is saved monthly—rule of thumb: approx. €3 per €1,000 of the loan amount. In our example, that would be €210 per month. This amount is added to the regular loan payment, resulting in a higher total monthly burden. Advantage: After 10 years, the home savings contract is available to you to pay off the remaining debt—at an interest rate fixed today.
What is the average cost of a mortgage?
In addition to the purchase price, there are other costs associated with buying a home—the so-called closing costs:
| Cost category | Percentage of the purchase price |
|---|---|
| Real estate transfer tax (NRW) | 6.5% |
| Notary and court fees | approx. 2% |
| Broker’s commission (incl. VAT) | 3.57% |
Example: For a purchase price of €300,000, approximately €36,000 in additional costs apply. You should be able to cover these from your own funds. You also need to inspect the property: do you want to and do you need to make any repairs? For an existing property, renovation costs, etc., will naturally be added.
Financial consulting: What will it cost me?
Nothing. Michael Meier’s consultation is completely free for you. You don’t sign any restrictive contracts and pay no fees. His commission is paid by the bank—not by you.
Advantage: He’s in the same boat as you. He only makes a commission if you receive a suitable offer and decide to go ahead with it. Instead of running from bank to bank yourself, he analyzes the entire market for you, compares offers, and presents the best options—tailored specifically to your project.
Here’s how a consultation with a financial advisor works
Before we begin, you’ll receive pre-contractual information —a legally required document that explains the terms of our collaboration. Once we get started, we’ll sign a brokerage agreement —transparent, of course, and with no hidden costs.
1 - Getting to Know Each Other
First and foremost, it’s all about you: the focus is on your income, expenses, and life plans. Michael Meier puts it bluntly: “Let your financial cards be seen.” Because only those who know exactly how much money they have available each month can make serious plans. Questions about your standard of living, future developments (e.g., family planning, career changes), and personal goals also play a role here.
2 - Needs Assessment
What are you looking to buy? An apartment or a house? Where is the property located? Does it need renovations, or are there plans for upgrades? Michael Meier transparently factors in all associated purchase costs and assesses which additional expenses (e.g., energy-efficiency upgrades) are likely to arise. In doing so, he also takes your individual financial situation and risk tolerance into account.
3 - Financing Plan
Based on this information, Michael Meier develops a customized financing plan. He uses two comparison platforms that cover nearly all banks in Germany to determine: Which bank is the best fit for your project? What terms and conditions are available? Are there any special discounts (e.g., for energy-efficient properties)? He also assesses which banks are open to your specific situation (e.g., self-employment, fixed-term contracts) and provides honest advice on which options make sense—and which do not.
4 - Document Service
When you buy through Kartheuser Immobilien, you benefit from streamlined processes: All property documents are forwarded directly to Michael Meier, so you don’t have to worry about a thing. He also supports you with off-market purchases—for example, by contacting sellers or other agents directly to obtain the necessary documents as quickly as possible. The advantage: With complete documentation, your financing can be reviewed and approved quickly—often faster than with a traditional bank.
Kartheuser Immobilien: Your journey to homeownership starts with the right partner
The path to owning your own home doesn’t have to be complicated—as an independent mortgage expert, Michael Meier guides you from our first meeting all the way to moving in—personally, transparently, and completely free of charge.
Thanks to our close collaboration with Kartheuser Immobilien, you benefit from streamlined communication, rapid access to all necessary documents, and personalized advice tailored entirely to your needs.
What you can expect from us:
- Personalized needs analysis
We listen carefully and find properties that truly match your vision and your lifestyle. - Wide selection & strong network
Whether you’re looking for a house or an apartment—thanks to our extensive database and valuable contacts in the region, we open doors that often remain closed to others. - Regional market expertise
We know Mettmann, Ratingen, and Velbert like the back of our hand—and know exactly where your dream property is hiding.
Ready to take the first step?
Then let’s have a chat—no-obligation and in person. Start building your dream of homeownership with us today!
