Most German home loans have a Zinsbindung (fixed-rate period), often ten or fifteen years, that ends before the loan is repaid. The end of that period is a decision point, not a formality: your lender's renewal offer need not be its best, and the law gives you more options, and earlier ones, than the renewal letter suggests.
1. What happens when the fixed rate ends
When the fixed-rate period ends before the loan is repaid, the remaining balance needs a new rate: an Anschlussfinanzierung (follow-up financing). There are two routes. You agree a new rate with your current lender (Prolongation), or you move the balance to another lender (Umschuldung).
If no new rate has been agreed, the borrower can end the loan with one month's notice, taking effect at the end of the fixed period, and repay it, wholly or in part, without any early repayment charge (§ 489(1) no. 1 BGB). If nothing new is agreed, the contract decides what happens next; where the loan continues at a variable rate, it can be ended at any time with three months' notice (§ 489(2) BGB).
2. Staying with your lender: Prolongation
Your lender must tell you, at the latest three months before the fixed rate ends, whether it is willing to agree a new one, and if so, which rate it is offering (§ 493(1) BGB). Such offers often come with a short deadline.
Staying is simple: the Grundschuld (land charge) securing the loan stays where it is, and nothing changes in the land register. The law does not require a fresh creditworthiness assessment for a follow-up loan with the same lender for the same purpose, unless the amount rises significantly (§ 505a(3) BGB). That is not a clean slate: the lender only has to say whether it will offer a new rate and which one (§ 493(1) BGB), not to offer its best terms, and how you have paid so far can shape its offer.
3. Switching lender: Umschuldung
Switching means a new loan contract with a new lender, which pays off the old loan on the day the fixed rate ends. The new lender checks your identity, creditworthiness and the property, and usually values the property again. For internationals, that means the questions of the first application, such as residence status, employment and the currency of income, are asked afresh; our guide to mortgages without German citizenship explains them.
The rate depends on the market on the day it is agreed and on the Beleihungsauslauf (loan-to-value ratio): the lower the remaining debt relative to the lender's valuation, the better the terms tend to be. Small differences add up: 0.3 percentage points on a balance of €100,000 is about €300 a year.
4. Forward loans
A Forward-Darlehen (forward loan) fixes today the rate for a loan that starts when the current fixed period ends. Forward loans are available up to five years (60 months) ahead, from the current lender or a new one, though not every lender offers them.
- The price is a surcharge. The Forward-Aufschlag is added to the current rate for each month of lead time and varies by lender; for roughly the last twelve months before the end date, many lenders charge none.
- It is binding. The loan has to be taken when the date comes, even if rates have fallen or plans have changed through a sale, a move or a separation. Not taking it triggers compensation for non-acceptance (Nichtabnahmeentschädigung).
- It is a bet on rates. It pays off only if market rates at the start date are above the agreed rate.
5. The ten-year exit in § 489 BGB
Long fixed rates have a statutory exit. Ten years after the loan was paid out in full, the borrower can end it, wholly or in part, with six months' notice and without an early repayment charge (§ 489(1) no. 2 BGB). A loan fixed for 15 or 20 years can therefore be refinanced after ten and a half years at the earliest. The right cannot be excluded or made more difficult by contract (§ 489(4) BGB). Three details matter:
- The ten years run from full payout, not from signing. If the money was paid out in stages, the last payment counts.
- If a new rate or repayment term has been agreed since, for instance in a Prolongation, the ten years run from that agreement.
- If the money is not repaid within two weeks after the notice takes effect, the notice is treated as never given (§ 489(3) BGB), so a new loan has to be ready in time.
6. Early repayment penalties, and when none is due
Repaying a fixed-rate loan during the fixed period is not a general right. With a legitimate interest, typically selling the property, the borrower can end the loan with three months' notice once six months have passed since full payout, but must compensate the lender for its loss through a Vorfälligkeitsentschädigung (early repayment penalty, § 490(2) BGB). Without such an interest there is no right to repay early; a lender may agree to release you, on its own terms. Selling because you are leaving Germany is treated like any other sale.
The amount depends mainly on the gap between the loan's rate and today's market rates: the further rates have fallen, the greater the lender's loss. For home loans there is no fixed percentage cap, unlike other consumer loans (§ 502(3) BGB). Once you tell the lender you intend to repay early, it must promptly tell you the amount (§ 493(5) BGB). Court rulings limit the calculation: it cannot run beyond the date on which you could have ended the loan anyway, and it must allow for your special repayment rights. Some Verbraucherzentralen check these calculations.
No penalty is due:
- at the end of the fixed-rate period;
- under the ten-year exit in § 489 BGB;
- on repayments within the Sondertilgung (special repayment) allowance in your contract;
- on a loan that no longer carries a fixed rate;
- where the repayment comes from an insurance policy taken out, as agreed in the loan contract, to secure repayment (§ 502(2) no. 1 BGB);
- where, in contracts from 21 March 2016 onwards, the information on the loan term, the borrower's right to terminate or the calculation of the penalty is insufficient (§ 502(2) no. 2 BGB).
7. What switching costs
At the end of the fixed period a switch carries no penalty, but the land charge has to move too. The usual route is a Grundschuldabtretung (assignment of the land charge): the old lender transfers its charge to the new one, a notary certifies the old lender's signature and the land registry records the new creditor, without the owner attending. The fees are set by law and depend on the amount of the charge; consumer guides put them at a small fraction of one per cent of it, far less than deleting the old charge and registering a new one.
Two other costs can arise. Bereitstellungszinsen (commitment interest) are charged if the new loan is not drawn within the lender's free period, commonly three to twelve months. And if the new loan is larger than the existing land charge, an additional charge may have to be registered, at extra cost.
8. A timeline
- Up to five years before: forward loans become available, with a surcharge that rises with the lead time.
- Ten years after full payout, for fixes longer than ten years: notice under § 489(1) no. 2 BGB can be given.
- About a year before: a follow-up loan can often be arranged without a forward surcharge, and consumer guides suggest comparing offers by then.
- About six months before: switching takes time for documents and a valuation, and a six-month period free of commitment interest is widely available.
- Three months before, at the latest: the current lender's statement and offer arrive (§ 493(1) BGB).
- One month before: the last point to give notice under § 489(1) no. 1 BGB for repayment at the end date.
The short version
When a fixed rate ends, the balance can be renewed with the current lender, moved to a new one or partly repaid, all without penalty. The current lender must state its position three months before the end, but its offer need not be its best; a new lender means a fresh credit check and a land charge assignment costing a small fraction of the charge. Forward loans lock in a rate up to five years ahead, at a surcharge and with no free way out. A rate fixed for more than ten years can be ended ten years after full payout with six months' notice; outside these exits, repaying early can cost a penalty.
Primary sources checked on 1 November 2026: the statutes linked above.