Techniques for extracting cash from real estate holdings.
For German homeowners seeking to unlock capital in retirement without selling their homes, two main equity release models are relevant: reverse mortgages and partial sales (also known as "Teilverkauf").
Partial sales are currently more established and popular in Germany. This model involves selling a portion of the property’s value to a specialist provider (e.g., HausVorteil AG) while retaining the right to live in the home. The homeowner receives liquidity upfront without having to leave the property, and the sale share can be repurchased later if desired. These schemes are typically flexible, legally secure, and designed to meet retirement planning needs. They also sometimes feature new variants, such as selling the land under the house via hereditary building rights ("Erbbaurecht") to unlock capital while keeping residency [1].
Reverse mortgages (sometimes called lifetime mortgages) exist but are less common in Germany compared to other countries like the UK or US. They function by providing a loan secured against the home’s value, with no repayment until death or moving out. While they convert home equity into cash flow without requiring sale, German uptake has been limited, partly due to regulatory and market structure differences.
Comparison highlights:
| Feature | Partial Sales | Reverse Mortgages | |------------------------|-----------------------------------------------|-------------------------------------------| | Ownership | Homeowner sells a share but keeps residence | Homeowner retains full ownership until loan repayment triggered | | Liquidity | Immediate cash from sale of share | Cash provided as loan, repaid later | | Repayment | Option to repurchase share; no monthly repayments | Loan + interest repaid on death or move | | Legal security | High legal safeguards, flexible contract types | Contract terms vary; may carry complexity and interest rates | | Popularity in Germany | More common and marketed by firms like HausVorteil AG | Less common; market still developing | | Suitability | Good for homeowners wanting predictable selling conditions | Good for those comfortable with debt and deferred repayment |
German market challenges include interest rate uncertainty and provider consolidation, which influences equity release product availability and conditions [1][5]. Partial sales schemes tend to offer more transparency and flexibility for retirees wanting to preserve their home life while unlocking funds.
In summary, partial sales are currently the preferred equity release solution for German retirees who want to access home equity without leaving their homes, offering legal security and financial predictability. Reverse mortgages exist but are less matured in Germany’s market context. New innovative products like selling land rights also expand options for unlocking capital flexibly [1].
As the demographic shift and declining pension levels lead to increased interest in securing liquidity in retirement, financial intermediaries are frequently asked about these solutions. For example, selling a third of a 300,000 euro property would release 100,000 euros with 250 euros due monthly. Loans over 100,000 euros are rare for retirees.
Christoph Neuhaus, founder and CEO of Wertfaktor Immobilien, a company specializing in the partial sale of private and commercial properties in Germany, emphasizes the flexibility offered by the partial sale model. The sellers are free to use, renovate, or rent the property. If the house or apartment is sold in its entirety one day, the company will take care of marketing and achieving the best possible selling price.
For those who prefer to remain tenants while unlocking capital, the reverse mortgage model, also known as Sale-Lease-Back, allows owners to become tenants, sell their property, and rent it back, without leaving their familiar environment.
Finding the right solution for individual customer needs is a challenge. Selling and renting is a common way to unlock capital in Germany, but it incurs new costs, such as rent payments. Through the partial sale, the sellers continue to benefit from the appreciation of the object. A comparison of new offers can be beneficial, as new solutions have emerged that allow homeowners to unlock capital from their properties in innovative ways.
[1] Neuhaus, C. (2021). The Future of Real Estate Financing: Innovations in Equity Release for Retirees. Wertfaktor Immobilien Blog. Retrieved from https://www.wertfaktor-immobilien.de/blog/the-future-of-real-estate-financing-innovations-in-equity-release-for-retirees/
[5] HausVorteil AG. (2020). Equity Release in Germany: Market Development and Challenges. HausVorteil AG Research Report. Retrieved from https://www.hausvorteil.de/uploads/media/HausVorteil_AG_Marktbericht_Equity_Release_2020.pdf
- Personal-finance advisors often recommend partial sales to German homeowners who wish to access their home equity without selling, as this model offers immediate liquidity, legal security, and the ability to maintain ownership while benefiting from property appreciation.
- In the realm of insurance and finance, reverse mortgages are less common in Germany's market, but still offer an option for homeowners who prefer to become tenants while unlocking their property's value, allowing them to continue residing in their familiar environment.
