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Germany: fixed mortgages are the norm (actually never even heard of another type), common runtimes are 10, 15, and 20 years, and no matter what the runtime is,
by ManuelKiessling 3y ago
Germany: fixed mortgages are the norm (actually never even heard of another type), common runtimes are 10, 15, and 20 years, and no matter what the runtime is, as the borrower you can simply exit the contract without even giving a reason after 10 years; and that’s not something in the contract, it’s a federal law.
You obviously have to pay back the remaining debt, but this makes it super smooth to either pay off all debt in one go or refinance.
- bhelkey 3y agoAre you not allowed to refinance other than at the 10 year mark?
- ManuelKiessling 3y agoYou can refinance earlier, or any time after the 10-year-period, if your contract is 10+ years. Anything after the 10-year-period comes without any kind of penalty. Getting out of the contract earlier is possible, but comes with a penalty called Vorfälligkeitsentschädigung — it boils down to the bank demanding the interest payments you would have paid if you‘d stayed in the contract for the whole 10 years. However, afaik, if you also had an agreement on „Sondertilgungen“, that is, if the contract allows to pay x% of additional down payment every year, the bank must assume you had paid this for the remaining years in the contract. No financial advice.
- bhelkey 3y agoThank you for the insight!