There is no special loan with early termination. However, each form of loan has its own terms of termination. You are legally entitled to early termination of your loan if you have mortgage after ten years with a period of six months. You can then exercise your special right of termination and exit your contract before the fixed interest period expires, without having to pay a prepayment penalty. This is regulated in paragraph 489 of the Civil Code (BGB). It doesn’t matter whether your fixed interest rate continues for three, five or more years. The ten-year notice period begins on the day the loan is paid out in full.
What happens if I want to cancel my contract early?
If you want to get out of your contract before the fixed interest period ends and your contract has not yet run for ten years, you are dependent on the goodwill of your bank. If the property is to be sold or if the property serves as security for another loan, the banks tend to agree to the termination. In these cases, they usually also ask for early repayment penalties for the interest they would miss. Banks can refuse to give notice if they only want to benefit from lower interest rates. If she nevertheless agrees, she can set the prepayment penalty to a maximum of twice the impending loss of interest.
Variable loan with three months’ notice
If you have agreed a variable loan with the bank, there is a notice period of three months. With this form of loan, the interest rate is adjusted to the market interest rate every three months. As a result, you are exposed to the constantly changing interest rate. As a rule, a variable loan is more expensive than mortgage lending, so it should only be used as a transition.
Forward loan for more planning security
With a forward loan, you can secure the current building rates up to five and a half years in advance. So you conclude the contract today, but the payment of the loan only begins after your interest rate has expired. In a low-interest phase, you secure the lower interest rate. This is particularly useful when interest rates are likely to rise again. If this does not happen contrary to your interest rate forecast, you are still obliged to accept the forward loan.