Our new flat: 2. The Purchase

I’m catching up on some blogging this week.  Yesterday I reported on our decision to buy a new flat.  Today, a look at our how we actually went ahead to buy it.

Convincing a bank to lend you money for a mortgage is basically a matter of convincing the bank that (a) the property that you want to buy is worth that much – should they want to repossess it at some point, and (b) that you can afford the repayments.

If you are in a steady job, that (b) is not really going to be a problem.  You show the bank your last wage slip and answer some questions about your lifestyle, and they take their decision.

Being self-employed makes it all rather more difficult.  I went to the bank armed with all sorts of facts and figures about my business, our insurance contracts, and any other expenses that we regularly have.  Actually, I’d had a lot of the figures worked out for a long time and and just needed to update them using our accounting software.  If the bank were going to ask me to guess something, such as how much we spend on food each month, then they were going to get an exact answer.

Instead of going to my usual branch, I had to go to a different office that dealt specifically with self-employed customers.  I am pleased to be able to write that I covered almost everything that they wanted to know, and only three items remained.  One of this was something called a Betriebswirtschaftliche Auswertung – basically this is a financial statement about my company that is produced by my tax advisor.  I rang him straight away (Friday afternoon) and by Monday morning I had everything I needed and forwarded it to the bank.  One of the other items was a SCHUFA check.  This is to make sure that we didn’t have any bad debts.  SCHUFA is not something that should be under-estimated.  If you get a bad entry on their database, it can be difficult to get credit with a bank or financing company.

The bank did not take long to reach a decision – on Monday afternoon I was on my way to pick our daughter up from Kindergarten, when my mobile rang to tell me that we could go ahead with the purchase.

I called the estate agent right away, and he set the wheels in motion…