Is Buying Property in Germany a Good Investment for Cross-Border Buyers?

For many people living in Luxembourg, whether you are a resident, an expat, or a cross-border commuter, the question often comes up: “Is buying property in Germany a good investment?”. Many people find the idea tempting.

In 2025, it could be a good time to buy. Buying property in Germany can be a good investment, especially for Luxembourg buyers. After falling about 10–12% since 2022, property prices in Germany are starting to rise again, but they are still lower than before.

The mortgage rates have dropped too, now sitting around 3.5% to 5%. With strong demand for rentals and not enough housing in many cities, more buyers see German real estate investment as a solid long-run option.

If you are hoping for more space, better value, or rental income just next door, this could be your moment. But does it really add up? In this guide, you will see what the numbers look like, what you’ll really pay, and how cross-border mortgages work. So you can decide if buying in Germany is the right move for you.

Why Luxembourgers Are Eyeing German Property

One big reason many people in Luxembourg look to Germany when they want to buy a home is simple, it costs less. Housing in Luxembourg is among the priciest in Europe, especially near the capital. Even renting a one-bedroom flat in the centre of Luxembourg City can cost around €1,900 per month.

But just across the border, you might pay closer to about €550 to €1,250 per month for something similar. That’s less than Luxembourg City, which makes a big difference for people who rent or plan to buy.

It’s not just rent that’s lower. Buying can feel more doable too, especially for families who want a bit more space. Big cities like Berlin and Munich are still expensive. In Berlin, the average price is about €8,300/m², but the other areas can be far more affordable.

Compared to Luxembourg prices, that’s a big gap.

Of course, the savings are not the only draw. Many people want a bit more room, a garden, or a quieter street than they would find inside Luxembourg City. Living just over the border makes that possible without giving up the chance to work in Luxembourg.

For commuters and families, it’s an easy way to stretch their budget, enjoy more space, and still stay close to home.

How Much Does It Cost to Buy Property in Germany & What’s the Return?

Buying property in Germany comes with a few extra costs you will need to plan for. The biggest one is the real estate transfer tax, which usually falls somewhere between 3.5% and 6.5% of the price, depending on where you buy.

On top of all that, notary fees add about 1.5% to 2%. If you hire an agent, their commission can be anywhere from 3% to 7%, often shared with the seller. There is a fee for having the property registered too, and that’s typically around 1%.

After you have bought the place, your return really depends on how you use it. Many people rent out their German property to help cover the mortgage and upkeep. How much you earn back might change a lot by location.

For example, cities like Berlin and Frankfurt usually have good demand but higher prices, so the return might feel tighter. Smaller towns cost less but may have fewer renters lined up.

When investing in German property, it’s smart to keep everyday costs in mind too. Think about repairs, local property tax, and general maintenance. If you would like to get a clear picture of what taxes you might pay when buying in Germany, we break that down in our guide.

If you’re wondering how much you might pay each month, you can run the numbers in seconds with our mortgage calculator. Looking at these costs and what you could earn back can help you figure out if buying in Germany really adds up for you.

Can You Get a German Mortgage from Luxembourg?

If you live in Luxembourg and want to buy just across the German border, you will probably need a mortgage. German banks do lend to buyers from outside Germany, but they often have stricter rules than they do for local residents.

If you are wondering whether you’re even allowed to buy, the answer is yes. Luxembourg residents are free to buy property in Germany without any special permission. EU rules make it simple.

When it comes to mortgages, banks usually want to see steady income, a secure job, and a decent deposit. Many lenders cover about 60% of the price for non-residents, so you will need to put in the rest yourself and cover extra costs like taxes and notary fees. Getting 100% financing is rare, but some Luxembourg banks offer special loans for cross-border commuters to help fill that gap.

It’s worth knowing what documents you will need and what the process looks like. If you haven’t yet, check out our guide on the key requirements to buy a house in Germany.

Rates can make a difference too. Right now, German mortgage rates sit around 3.5% to 4.5%. Luxembourg’s variable rates are around 3.3% to 3.5%, while fixed rates range from approximately 3.2% for short-term fixes (1–5 years) up to around 3.7% for longer terms. Long-term borrowing costs are usually a bit lower in Germany, which can help keep repayments down.

If you are not sure where to start, talking to an advisor who understands cross-border mortgages is always recommended.

Benefits of Buying Property in Germany

Many ask, is buying property in Germany really a good investment? Here’s why many buyers think so.

The main reason many people from Luxembourg look across the border is the chance to build up wealth in the long run. When you own a home, you build equity as you pay it off. If the prices go up over time, that can add even more value.

Germany’s real estate market has a good reputation for being steady. There is a high demand for homes and rentals, especially close to cities and commuter areas. If you rent your property out, that demand can make it easier to find tenants and cover the costs.

Owning also puts you in better control of how much you pay monthly. Rent can keep rising, but with a mortgage, your payments stay relatively more constant. For many, that brings some peace of comfort.

Long-term owners can benefit at tax time too. If you sell the property after ten years, you usually don’t pay tax on any profit. If you rent the place out, you can often deduct costs like mortgage interest and upkeep.

Last but not least, you own a place in a country with a strong economy and good roads, trains, and services. For people who cross the border every day, it’s a practical way to get more space while staying close to work and family in Luxembourg.

What Are the Risks?

Buying a place in Germany is not without its challenges, especially if you live in Luxembourg. One thing that surprises many buyers is how much the upfront costs add up. With the transfer tax, notary fees, and any agent fee included, you could easily find yourself paying another 10% to 15% above the cost of purchase.

It can also be difficult to get a mortgage if you are not living in Germany full-time. Many banks want a bigger down payment and more paperwork. Sorting that out can take extra time, especially if you are new to the process.

Once you own the home, the upkeep is on you. Major repairs or costs for shared buildings can pop up and add to your budget.

The market can be tight too. Good homes near Luxembourg or in busy commuter towns tend to sell fast, and prices can shift over time.

If you’d like to avoid some common slip-ups, take a look at our guide on mistakes to avoid when buying property in Germany. It can help you plan ahead and feel more prepared..

How Smart Finance Can Help You

At Smart Finance, we help people in Luxembourg get cross-border mortgages, even up to 100% financing when it’s possible. We also help you figure out the tax side, the paperwork, and how buying in Germany can fit into your bigger financial plans.

If you would like to see what’s really work for you, just ask. We’re here to make it clear and easy to understand.

Germany can be a smart place to invest, but it’s worth getting it right from the start. If you have questions or want to talk it through, schedule a free appointment with us today. We’re ready when you are.