German finance terms explained

The calculators follow German rules, and banks, notaries and the tax office will use the German words in every offer and letter. Here is what they mean, in plain English. Throughout the app, tap a or a dotted word for the same explanation.

Loans & mortgages

Annuitätendarlehen Annuity loan: The standard German mortgage. You pay the same monthly amount (the rate) for the whole fixed-rate period. Each payment covers the interest first; the rest pays down the loan. As the debt shrinks, less goes to interest and more to repayment.
Darlehensbetrag Loan amount: The amount you borrow from the bank – usually the purchase price plus incidental costs, minus the own capital you bring.
Rate / Monatsrate Monthly payment: What you pay the bank every month: interest plus repayment. With an annuity loan it stays the same for the whole fixed-rate period.
Sollzins Nominal interest rate: The yearly interest rate on the loan, without fees. The bank charges one twelfth of it each month on the remaining debt. To compare offers, look at the effective rate instead.
Effektivzins Effective annual rate (APR): The true yearly cost of the loan: it includes monthly compounding and fees. German banks must state it in every offer, which makes it the fairest number for comparing loans.
Tilgung Repayment: The part of your payment that reduces the debt – everything that is not interest. In offers, "Tilgung" usually means the initial repayment rate.
Anfängliche Tilgung Initial repayment rate: The share of the loan you repay in the first year, in percent. Together with the interest rate it sets the monthly payment: (interest + repayment) × loan ÷ 12. Because interest falls over time, the repayment grows each year. 2–3% is common; below 1.5% the loan takes very long to pay off.
Zinsbindung Fixed-rate period: How long the interest rate is guaranteed, typically 5–20 years. After it ends, you have to refinance the remaining debt at whatever rates apply then. By law you can cancel any loan 10 years after payout with six months' notice, without a penalty.
Restschuld Remaining debt: What you still owe at a given time – most importantly at the end of the fixed-rate period, because that amount has to be refinanced at the rates of that time.
Anschlussfinanzierung Follow-up financing: The new loan (or new rate with the same bank) for the remaining debt once the fixed-rate period ends. Nobody knows future rates, so plan with a pessimistic value. A forward loan (Forward-Darlehen) can lock in a rate up to about five years in advance, for a surcharge.
Forward-Darlehen Forward loan: A follow-up loan you sign today for a fixed-rate period that ends up to about five years from now. It locks in today's rate plus a small surcharge per month of lead time – insurance against rising rates.
Tilgungssatzwechsel Change of repayment rate: A contract option to raise or lower the repayment rate – and so the monthly payment – a few times during the fixed-rate period. Raising it works like a regular extra repayment; lowering it gives you breathing room if money gets tight.
Laufzeit Term: How long it takes until the loan is fully repaid. Not the same as the fixed-rate period, which is usually shorter.
Sondertilgung Special (extra) repayment: Money you pay on top of the regular rate to reduce the debt faster. It only works if your contract allows it – typically up to 5% of the loan per year for free. Every euro repaid early saves the interest on it for the rest of the term.
Tilgungsplan Repayment schedule: A table of every payment, showing how much goes to interest and to repayment and what debt remains afterwards.
Bearbeitungsgebühr / Schätzkosten Processing and valuation fees: One-off costs of taking out the loan, such as a fee for valuing the property. For consumer loans, German courts have ruled general processing fees unlawful, but valuation, broker or partial-payout fees may still apply. Fees raise the effective rate.
Vollfinanzierung 100% financing: A loan that covers the whole purchase price, sometimes even the incidental costs. Possible with a high, stable income, but banks charge noticeably higher interest for it.

Buying & owning a home

Eigenkapital Own capital (down payment): Savings you put into the purchase yourself. Banks expect it to cover at least the incidental costs; with 20% or more of the price on top you get noticeably better interest rates.
Kaufnebenkosten Incidental purchase costs: Costs on top of the price: real estate transfer tax, notary, land registry and possibly a broker. Together 7–15% of the price, depending on the federal state. Banks rarely finance them, so plan to pay them from your own capital.
Grunderwerbsteuer Real estate transfer tax: A one-off tax on buying property, between 3.5% and 6.5% of the price depending on the federal state. The tax office sends the bill after the purchase; you are only registered as owner once it is paid. Movable items such as a fitted kitchen can be listed separately and are not taxed.
Notar Notary: In Germany every property purchase must be signed in front of a notary, who drafts the contract and handles the registration. Fees are set by law (GNotKG), roughly 1–1.5% of the price.
Grundbuch Land registry: The official register of who owns a property and which loans are secured on it (Grundschuld). Entering you as owner and registering the bank's security costs about 0.5% of the price.
Maklerprovision Broker's commission: The fee for the estate agent. For houses and apartments the buyer pays at most half of it; a common share is 3.57% of the price including VAT. There is none if you buy directly from the owner.
Beleihungsauslauf Loan-to-value (LTV): The loan as a share of the property's value. The lower it is, the less risk for the bank and the better your interest rate – the usual steps are 60%, 80%, 90% and 100%. Banks measure it against their own cautious valuation (Beleihungswert), often 10–20% below the price, so their figure is higher than loan ÷ price.
Bundesland Federal state: Germany's 16 states. Each sets its own real estate transfer tax, which is why the state of the property matters for the purchase costs.
Hausgeld Service charge (apartments): The monthly amount apartment owners pay to the owners' association for building insurance, caretaker, management, shared utilities and the maintenance reserve. Often €3–5 per m².
Instandhaltungsrücklage Maintenance reserve: Money set aside for repairs such as a new roof or heating. For a house you save it yourself; for an apartment part of it is included in the Hausgeld. Common rules of thumb are 1–1.5% of the building's value per year, or €10–15 per m² – more for older buildings.
Grundsteuer Property tax: A yearly tax the owner pays to the municipality. It is usually a few hundred euros a year; landlords can pass it on to tenants.
Kaltmiete / Warmmiete Base rent / rent incl. utilities: Kaltmiete is the rent for the flat alone. On top come the Nebenkosten (utilities such as heating, water, waste, building insurance); rent including them is the Warmmiete. Listings usually show the Kaltmiete.
Nebenkosten Utility and service costs: Costs on top of the base rent: heating, water, waste collection, building insurance, caretaker. Tenants pay a monthly advance and get a yearly statement. Owners pay most of these too.

Tax on savings & investments

Abgeltungsteuer Flat tax on capital income: A flat 25% tax on interest, dividends and investment gains, plus the solidarity surcharge and possibly church tax – 26.375% in total without church tax. German banks deduct it automatically.
Solidaritätszuschlag (Soli) Solidarity surcharge: A surcharge of 5.5% on top of the flat tax (not on your income). Unlike for income tax, it still applies to capital income for everyone.
Kirchensteuer Church tax: Only if you are a registered member of a church that collects it (e.g. Catholic or Protestant – you declared this when registering your address). It is 8% of the tax in Bavaria and Baden-Württemberg and 9% elsewhere. If you are not a member, choose "No church tax".
Sparerpauschbetrag Saver's allowance: The first €1,000 of capital income per year are tax-free, €2,000 for married couples and civil partners filing jointly. To use it, give your bank an exemption order (Freistellungsauftrag); you can split it across several banks.
Freistellungsauftrag Exemption order: A form (usually a click in online banking) that tells your bank how much of your saver's allowance to apply. Without it, the bank deducts tax from the first euro and you can only reclaim it in your tax return.
Teilfreistellung Partial tax exemption for funds: Part of the gains from investment funds is tax-free, because the fund already pays some tax itself: 30% for equity funds (e.g. most stock ETFs) and 15% for mixed funds. Bond and money-market funds get none.
Vorabpauschale Advance lump-sum tax: A small yearly tax on funds that reinvest their gains (accumulating ETFs), charged each January even if you sell nothing. It is based on the fund's value × the Basiszins × 70%, capped at the actual gain. It is credited when you sell, so you are not taxed twice.
Basiszins Base interest rate: A rate the Ministry of Finance publishes every January, derived from long-term government bond yields. It is only used to calculate the Vorabpauschale – a higher Basiszins means more advance tax.

Saving & investing

Sparplan Savings plan: Investing a fixed amount every month, for example into an ETF. Most German brokers offer them from €1–25 a month, often without fees.
Entnahmeplan Withdrawal plan: Taking a regular monthly amount out of an investment while the rest stays invested – for example to top up a pension. Only the gains in each withdrawal are taxed.
Tagesgeld / Festgeld Instant-access / fixed-term savings: Tagesgeld is a savings account you can withdraw from any day; Festgeld locks your money for a fixed term at a fixed rate. Both are covered by the deposit guarantee up to €100,000 per bank.
Laufende Kosten (TER) Total expense ratio: The yearly fund fee, taken out of the fund's value. Broad ETFs cost about 0.1–0.3% a year, actively managed funds often 1.5% or more – over decades that difference adds up to a lot.