Paying down your mortgage: repay or invest, and the ways to repay

3 min read · Updated 26 October 2026 · Written for English speakers dealing with money in Germany

Spare money can pay down the loan or go somewhere else. How each works, and why the best strategy is rarely obvious.

On this page

  1. Repay or invest?
  2. If you repay: your options
  3. The best strategy is rarely obvious

  1. Repay or invest?

    Repay. A certain saving: the loan's interest rate, on every euro.

    On a home you live in, the interest you save isn't taxed. The money is in the home then, and comes back only if you sell or borrow again, so keep a reserve for repairs and the unexpected.

    Invest. It may earn more or less than the loan costs, and stays at hand.

    Returns aren't certain, and gains above the yearly allowance are taxed.

  2. If you repay: your options

    Special repayments (Sondertilgung). Extra without a charge, often up to 5 % of the loan a year.

    Your contract says how much, how often, and whether an unused year carries over.

    A higher repayment rate (Tilgungssatzwechsel). Where the contract allows a change.

    It pays the loan off sooner. Lowering it again frees money each month when life changes.

    When the fixed rate ends. Repay any amount, without a charge.

    The rest runs on at a new rate: your bank's renewal (Prolongation), another lender's loan, or a forward loan (Forward-Darlehen) that fixes it often up to five years ahead.

    After ten years. End the loan with six months' notice and no charge (§ 489 BGB).

    Counted from when the loan was fully paid out, even if the rate is fixed for longer (§ 489(1) no. 2 BGB).

    In full, before then. Usually only when you sell, against a charge.

    The lender can charge for the interest it loses (Vorfälligkeitsentschädigung, § 490(2) BGB).

  3. The best strategy is rarely obvious

    It turns on your interest rate and when it ends, your other savings, your tax, and what rates do next. A financing expert works it out on your own loan.

When the fixed rate ends, in more detail: renewing, switching and forward loans.

Primary sources checked on 26 October 2026: the statutes and official pages linked above.

Keep reading on this

Fixed Rate Ending on Your German Mortgage?

Renewing versus switching lender, forward loans and their surcharge, the ten-year exit under § 489 BGB, when early repayment penalties do and do not apply, land charge assignment costs and a timeline.

Buying Property in Germany: Additional Costs

The steps from reservation to keys, the priority notice and land register, transfer tax by state, notary, registry and agent costs, the equity lenders expect, and the interpreter rule at the notary.

Finding and Checking a Property in Germany

Where homes are listed, reading a listing, what to look at in a viewing, the papers to ask for, a viewing checklist to print, and what a home is worth.

Everything above is general. For advice on your own situation, you can ask for an English-speaking financing expert in Germany. The bank pays them a commission when you take out a loan. You pay us nothing. If you go ahead with them, they may pay us a referral fee. What they pay never decides who your request goes to.

General information, not financial, tax or legal advice. Mortgage decisions turn on details — your residence permit and contract, your equity, and the costs the property and the state add, and none of that can be judged from an article. A licensed professional who knows your situation can tell you what applies to you.