Financial · Glossary

TilgungAmortisation / principal repayment

The rate at which you pay down the loan principal

3 min read·Updated December 2024

Tilgung is the principal repayment portion of your mortgage — the part of each payment that actually reduces the loan, usually expressed as the percentage of the original loan repaid in year one.

The Trade-Off

Common Tilgung rates run from one to three percent, with some products allowing more. A higher Tilgung shrinks the balance faster and leaves a smaller Restschuld when the Zinsbindung ends — in exchange for a higher monthly payment. A lower Tilgung leaves more cash in hand each month but more debt to refinance later.

How It Interacts With Cashflow

  • Higher Tilgung trades current cashflow for faster equity build-up
  • Lower Tilgung improves monthly cashflow but raises refinancing risk
  • Most German loans allow extra repayments (Sondertilgung), often up to 5% of the loan per year

Understand the four levers of a German mortgage

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Lesson 2.3 · How property investment works in Germany

Financing

How German mortgages (Annuitätendarlehen) work, and financing as a non-resident.

Related Terms

Mortgage(Hypothek / Immobiliendarlehen)

A mortgage (Hypothek or Immobiliendarlehen) is a loan secured by property. In Germany, typical terms include 10-30 year fixed interest rates and 1-3% annual repayment rates.

Annuitätendarlehen(Annuity loan)

An Annuitätendarlehen is the dominant German mortgage type. The monthly payment stays flat throughout the Zinsbindung, while inside it the interest portion shrinks and the principal (Tilgung) portion grows as the balance falls.

Interest Rate(Zinssatz)

The interest rate (Zinssatz) is the annual percentage charged on your mortgage. In Germany, rates are typically fixed for 10-20 years. As of 2024, rates range from 3.5-5%.

Planning a purchase?

Buying in Germany adds roughly 7% to 12% on top of the purchase price.

Transfer tax

3.5% to 6.5% of the price, set by the state.

Notary & registry

About 1.5% to 2%, fixed by law (GNotKG).

Agent commission

Usually around 3.57% as the buyer's share.

Run your full numbers How buying works here

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Tilgung (Amortisation / principal repayment) | Financemate Glossary