Loan for the deposit on your first flat: your path to financial freedom when moving in
18/07/2025
8
Minutes
Katrin Straub
Managing Director at nextsure
The dream of your first own flat is within reach, but the deposit of up to three months’ rent is blowing your budget? This is a challenge faced by many young people and students. A deposit loan can be the solution here, easing financial pressure and making the move possible.
The topic in brief and concise terms
A loan for the rental deposit makes it possible to manage the high initial outlay of up to three months' rent without dipping into your savings.
The statutory basis (§ 551 BGB) limits the security deposit to three months’ net cold rent and guarantees tenants the right to pay in instalments and receive interest.
Alternatives such as a rental deposit guarantee are flexible, but in the long term they can be more expensive than a one-off instalment loan due to annual fees.
Understanding the rental deposit as the first financial hurdle
The tenancy deposit is a security provided to the landlord, the amount of which is legally limited to a maximum of three months' net rent. With a net rent of 700 euros, for example, the deposit can therefore be up to 2,100 euros. Although the legislator allows tenants to pay the deposit in three equal monthly instalments, even this partial payment is a burden for many. Many new tenants underestimate this financial outlay, which comes on top of moving costs and the initial furnishings. A missing deposit amount should not, however, be an obstacle on the way to your dream flat, because there are flexible financing solutions. The exact rules on the deposit can be found in the German Civil Code (BGB) under Section 551. This section not only sets the upper limit, but also states that the landlord must deposit the money separately from their assets and pay interest on it. Knowing these legal basics is the first step towards planning your finances around the move-in with confidence.
How the rental deposit loan works
A loan for the deposit is usually a standard personal instalment loan with no specific purpose. This means you receive the requested amount directly into your bank account and can transfer it to the landlord. Repayment is made in fixed monthly instalments over an agreed term. The key requirements for approval are being of legal age, having a place of residence in Germany and sufficient creditworthiness, which is usually checked with a SCHUFA report. Regular income is also crucial, with some banks requiring a minimum employment period of six months. The key advantage is that you can use your savings for other important purchases such as furniture or a new kitchen. Such an instalment loan with no specific purpose offers maximum flexibility. Interest costs are an important factor to take into account. For a deposit amount of 2,400 euros and an effective annual interest rate of five per cent over a term of twelve months, total borrowing costs amount to around 64 euros. A careful budget calculation before applying for a loan helps you realistically assess the monthly burden. This makes the loan a predictable and often cost-effective alternative to using an expensive overdraft facility.
Review alternatives to a rental deposit loan
Apart from a direct loan, there are other ways to provide a rental deposit without having to pay a large sum upfront. A popular option is a rental deposit guarantee, often also referred to as rental deposit insurance. In this case, an insurance company or a bank acts as guarantor for you to the landlord. You pay an annual fee for this, which is based as a percentage on the deposit amount – often between four and five per cent. For a deposit of €2,000, that would be €80 to €100 per year. This solution is intended primarily as a temporary measure, as the fees can exceed the cost of a loan over the years. The landlord must agree to this form of security. Here is an overview of the most common alternatives:
Rental deposit guarantee: An insurance company guarantees for you. You pay an annual fee, but not the deposit amount. Ideal for short-term financial bottlenecks. For more information, see rental deposit insurance.
Bank guarantee (bank surety): Similar to insurance, except that a bank acts as guarantor here. The conditions are often stricter and tied to an account with the bank.
Private loan: Borrowing money from family or friends can be interest-free, but it carries the risk of private conflicts. A written contract is essential here.
Fund-linked securities account: You can also pledge a securities account to the landlord. This offers the chance of returns, but also risks from price fluctuations.
Each of these options has specific advantages and disadvantages that should be weighed against your own financial situation and the rental period.
Expert knowledge: legal details and clever design
Anyone who delves deeper into the subject will encounter important legal nuances. According to § 551 BGB, as a tenant you are entitled to the interest earned on the deposit, which enhances the security. Once the tenancy ends, the landlord must account for and repay the deposit. In general, they have a review period of three to six months for this. Only in the case of outstanding claims, such as an outstanding service-charge statement, may they retain a reasonable portion for longer, but for a maximum of twelve months. Our expert tip: At the handover of the property, insist on a detailed handover report recording the condition of the flat. This minimises later disputes about alleged damage and speeds up the return of the deposit. If you take out a loan, look for flexible terms. A free option for special repayments is worth its weight in gold. As soon as you get the deposit back from the landlord, you can repay the loan early and save on interest costs. This is particularly relevant for students, who often rent for only a few years and already have a financial burden with a student loan for living expenses.
From the deposit to full moving financing
< p>The deposit is only part of the overall financial burden of moving house. Often there are also estate agent fees, costs for the van and expenses for new furnishings. A flexible instalment loan can be planned so that it covers not only the deposit, but also these additional items. A loan for deposit and estate agent fees bundles the financing and creates clear arrangements with just one monthly instalment. If you need a new kitchen, for example, this can be factored in directly. A comparison for kitchen financing shows that bundled loans often offer better terms than several small loans. Plan realistically from the outset and list all expected costs. This allows you to determine the loan amount precisely and avoid expensive additional financing. Smaller renovation work in the new flat can also be financed in this way, increasing the value and living comfort from the very beginning. A low-cost renovation loan is the right solution for this. With a longer term, you can keep monthly instalments low and protect your liquidity, which is particularly advantageous with a long-term loan. Also think about furnishing, because a furniture loan with no deposit can make the start easier still. Request an individual risk analysis now: Have your insurance situation checked free of charge and receive specific optimisation suggestions.
More useful links
Wikipedia provides comprehensive information on rental security (deposit).
The Federal Statistical Office provides current statistics on housing.
The consumer advice centre provides information on important aspects of the tenancy agreement, especially when moving out.
The German Tenants' Association offers insights into recent rulings by the Federal Court of Justice relating to the rental deposit.
The Federal Employment Agency provides information on housing regulations in the context of citizens' income.
The German Federal Bank provides an indicator system for the residential property market.
The Federal Ministry for the Environment provides information on the Consumer Credit Directive.
The KfW provides information on funding programmes for home ownership.
FAQ
What documents do I need for a loan for the deposit?
As a rule, you will need a valid identity card, recent payslips from the last two to three months, your bank statements and the tenancy agreement as proof of the deposit amount. The exact requirements may vary depending on the bank.
Can I get a deposit loan even with a fixed-term employment contract?
Yes, that is possible. Many banks also grant loans with fixed-term employment contracts, provided the loan term ends before the contract expires. A positive credit assessment is also a prerequisite here.
Can I repay the loan early if I get the deposit back from the landlord?
Yes, with most instalment loans, special repayments or full early repayment are possible. When taking out the contract, make sure these options are free of charge, so you can save on interest as soon as you get your deposit back.
What happens to the loan if the landlord withholds part of the deposit?
The loan agreement continues независимо of the landlord’s behaviour. You must continue paying the monthly instalments. You must make up the amount withheld by the landlord from your own funds, if the claim is justified.
Is a loan for the security deposit relevant to SCHUFA?
Yes. The credit inquiry is recorded with SCHUFA and the approved loan is entered there. Repayment on time can have a positive effect on your SCHUFA score, while late payments can have a negative effect.
Can I also use the loan for additional moving costs?
Yes, an instalment loan for the deposit is often granted as a loan for unrestricted use. You can therefore also use the loan amount for renovations, furniture or the estate agent's fee if you set the amount correspondingly higher.
