Depot as a secret weapon: This is how property buyers in Cologne benefit!

Depot as a secret weapon: This is how property buyers in Cologne benefit!

Buying a property as an investment represents an important step into the financial future for many young buyers. According to the latest reports, many buyers, including so-called “Max”, who is in his late 20s and wants to purchase a 2-room apartment in Cologne for 210,000 euros, are using atypical financing methods. Max plans to use his 50,000 euros in equity and rental income to finance his project.

When purchasing real estate, the question often arises as to whether existing securities portfolios should be liquidated in order to create equity. A survey by Süddeutsche.de shows that such deposits are often used for retirement provision. In times of low savings interest rates, stocks and securities are becoming increasingly popular due to their higher return potential of 6-8% in a diversified portfolio.

Different financing approaches

When buying a property, which will cost around 200,000 euros, Max has to factor in an additional 10% of additional costs. These include, among other things, the property transfer tax of 6.5% in North Rhine-Westphalia and notary and land registry fees of around 2%. While the rental income is intended to finance the loan installments, in-depth knowledge of securities deposits could pay off. According to the information from Süddeutsche.de, a depot can also be used as security for real estate financing - although not at every bank and every depot.

Interestingly, buyers like Max could temporarily receive better financing conditions by transferring their deposit to a bank. However, the customer remains entitled to price gains and dividends, which could make the decision even easier. However, it should be noted that banks usually only accept 50-60% of the deposit value as security, which implies a significant discount of 40-50%.

Risks and tax aspects

Investing in securities involves risks as price developments are unpredictable. Max would also have to take into account tax levies of up to 27.99% (including solidarity surcharge and church tax) when selling his portfolio. Effectively managing such financial obligations requires buyers to have financial experience and actively negotiate with banks.

Max's purchase plans are influenced by other factors: The rule of thumb for maintenance costs is to budget 1% of the purchase price annually. In his case, that would be around 2,100 euros per year, which must be taken into account in addition to the additional costs and the repayment of the mortgage loan of 1.5% with a 15-year fixed interest rate. Without loss of rent, the sales price of his property after 15 years should be around 282,632 euros, which corresponds to an increase in value of around 35%.

In summary, it can be seen that purchasing real estate as an investment is characterized by a variety of options and considerations. Buyers like Max can benefit from a combination of equity, securities deposits and rental income, but must also keep an eye on the associated risks and tax obligations in order to be sustainably successful.