It is possible to change your real estate loan before the fixed interest period expires. However, special requirements apply. Basically:
- You have a special right of termination after ten years with a notice period of 6 months.
- There are special termination requirements for ten-year terminations
As a rule, however, you will have to pay a prepayment penalty if you cancel early.
My loan has been running for more than ten years
If your fixed interest rate has been in effect for more than ten years, the legislature has incorporated a special right of termination. After ten years of fixed interest rates, you have the option at any time to terminate your current mortgage with six months’ notice without incurring early repayment penalty. It does not matter whether your real estate loan will take another two, five or more years.
My loan has been running for less than ten years
If you want to change your real estate loan even though your fixed interest rate has been running for less than ten years, you will have a hard time getting out of the loan contract. In such cases, the bank checks carefully whether it is ready to accept the termination of the real estate loan before the interest rate expires. You are therefore exposed to the benevolence of the credit institution. For early departure, she requires prepayment penalty. If you sell the property or if it is needed to secure an additional loan, the banks are more willing to accept the termination. Practice has shown, however, that the financial institutions will also accommodate you if a move is pending or your income situation has changed. In any case, it is important to contact the lender as early as possible and talk about the change of loan and the terms.
Secure low interest rates today with the forward loan
If your fixed interest rate does not expire in five years or less, you can still benefit from the low interest rate phase. With a forward loan, you can secure the current building rates up to five and a half years in advance. The loan will not be paid off until the interest rate fixing for the old financing has expired. For every month that you secure the interest in advance, there is an interest surcharge on the borrowing rate. Therefore, the recommendation is to only take out a forward loan two to three years before the fixed interest period expires. Interest rate developments can also be assessed somewhat better during this period.