German Mortgage

Refinancing Your Mortgage in Germany

This article explains the various options for early refinancing and provides information on what measures you can take and when.

 

When it comes to mortgage financing, you commit yourself to your bank for a long time right from the start by fixing the interest for a certain duration. Depending on the fixed interest duration you decided on at the beginning, you will have a contract for a minimum of 5 years and a maximum of perhaps even 30 years. It is important to know that you can only cancel a mortgage contract with a good reason: divorce, house sale, or professional move, for example. Even in these cases, the bank will charge you with an early repayment penalty.


However, there are still opportunities to benefit from the extremely low-interest-rate level.

 

Current interest rates are so attractively low that many homeowners would like to get rid of their loan early and restructure their debts. By refinancing the debt you can get a better interest rate with a new bank and potentially save many thousands of Euros.

 

How high are the savings potential?

The probability that you will get a better interest rate by switching to another bank is very high. Keep in mind that even a few percentage points behind the decimal point can mean savings of several thousand Euros over the years. A prolongation with your house bank is almost never worth it. As you have already paid off part of your mortgage, the loan to value ratio (LTV), i.e. the value of the loan compared to the value of your house, has already decreased. This allows you to borrow at a more favourable interest rate.

 

Remember that the value of your property may have increased, which will further reduce the loan-to-value ratio and thus your future interest rate.

 

RULE OF THUMB:

A debt rescheduling is worthwhile if the interest rate of the new loan is 0.2 percentage points better than the old one.

 

Are you eligible to refinance your mortgage?

If you have already completed 5 years of your current mortgage you are eligible to apply for refinancing for a refinancing.

 

Depending on the period of your mortgage LoanLink can support you to: 

  • refinance with a new lender
  • prolonge with your current lender
  • receive a forward mortgage with any lender

 

The table below shows you which action you can take in different periods of time.

Have a look into the table to find out if you’re eligible to apply for refinancing. 

 

Period Scope for action
The credit agreement has been running for more than 10 years? You can terminate and refinance your mortgage at any time with a notice period of 6 months.
Only 12 months left until the fixed interest rate expires? You can either stay with the same bank and extend the loan (rollover) or terminate the contract now and carry out a debt restructuring.
Your mortgage will expire in the next five years, but will still last longer than 12 months?  You still cannot terminate the mortgage, but you can take out a forward loan to pay off the remaining debt later.

 

Your credit agreement has been running for more than 10 years?

You are eligible to take advantage of the low-interest rates by cancelling your old mortgage! Based on §489 BGB you are eligible to cancel your mortgage contract and switch to a different lender at any time after 10 years. You can start to refinance the remaining amount with a notice period of 6 months. This special right of termination does not end, which means you can still use it after 11 years, 20 years or 30 years, on any day. And also regardless of how much longer your fixed interest period continues.

 

Only 12 months left (or less) until the fixed interest rate expires?

Your fixed-interest period is about to expire, the contract with your old bank will end automatically and there will normally be an outstanding balance remaining.  The previous bank must inform you at least three months before the end of the contract if it is willing to extend it so that if not, you have enough time to find a new bank. Usually, the bank will also make you a new offer. Only in rare cases a bank doesn’t want to continue the mortgage for different reasons. 

 

You can check with your current bank to see whether they will let you out of the contract a few months earlier (against an early repayment penalty). If not, nevertheless inform the bank in writing that you do not wish to continue the current property loan after the end of the fixed term. However, only do this if you already have a loan commitment from a new bank in your pocket! Our mortgage experts can help you to find the best offers. Please feel free to get in touch with us to get a better understanding of your savings potential by signing up here

 

Your fixed term will end within the next five years, but will still last longer than 12 months? 

You may now take out a forward loan with a new bank for debt restructuring to secure the current interest rates for later. To do this, you will sign a contract today at the current interest rates. The term loan will be dated so that it covers the remaining debt when your current mortgage expires. This way, you can reserve the current interest rates for later. This is particularly useful if you expect interest rates to rise in the coming years. Without a forward loan, you would be at the mercy of higher interest rates and would have to finance your follow-up financing at higher rates.

 

Please feel free to get in touch with our mortgage experts to get a better understanding of your savings potential by signing up here

 

How does the refinancing process work?

  • Sign up on LoanLink to explain to us more about your refinancing project and your current mortgage
  • Schedule a call in your dashboard to receive your personalized offers
  • Upload your documents and let us take care of the rest

 

Which documents do I need?

In general, you can expect to prepare the same documents you’ve needed when initially applying for your mortgage, possibly even less. You will receive your personalized document list in your document section after you’ve signed up on LoanLink.

 

What interest rates can I expect?

This really depends on how much your property is currently worth in comparison to the outstanding balance (loan-to-value ratio). The lower this ratio is, the lower your interest rate will be. As interest rates can vary on a daily basis and even regionally it would be best to reach out to us and ask for your personalized quote.

 

Source

https://www.drklein.de/umschuldung.html#c17940

What our customers say about us

Eliza Apperly
Eliza Apperly
14:56 12 May 20
I’ve had an outstanding experience with LoanLink and would highly recommend their services – particularly to those who are less familiar with the German market. The platform is excellent, streamlining the somewhat overwhelming world of mortgages into a clear step-by-step guide and a thorough breakdown of different financing options and plans.Throughout, Jan Joisten has been an expert advisor - not only in his market knowledge but also in his true gift for customer care. I really appreciated his efficient, patient, and proactive approach, always getting back to enquiries really swiftly and making time to speak directly on the phone. He has consistently gone above and beyond to find the best offer - even in the very challenging circumstance of Covid-19 - and I’m immensely grateful for his support. Thank you Jan and the team, and all the very best! You deserve great success.read more
Elisa Eckes
Elisa Eckes
21:45 01 May 20
Our contact at LoanLink is Jan. We are very happy with the time he took to explain our mortgage options and the property purchasing process in Germany. He speaks English perfectly which was very helpful for us as our German is limited. Jan is very responsive, patient when we didn't understand something (the process is different than where we come from) and he was never pushy. He advised us and never tried to make us hurry to decide. Furthermore, LoanLink Dashboard is easy to navigate and very useful to do everything online. I highly recommend LoanLink.read more
oana botez
oana botez
08:35 24 Apr 20
The level of professionalism and customer care is impressive. The process was very easy and clear and I felt supported every step of the way. The agent that was helping me Jan, went above and beyond to make this happen and made me feel like this was a top priority for him. I only speak English, however this was in no way an issue. Thank you very much, it was a pleasure collaborating with you!read more
Nicolas Gotchac
Nicolas Gotchac
09:55 07 Apr 20
Great service, 100% recommended The whole experience was great, and everything went as smooth as it could! Jan was very responsive, always available to answer our questions. We got the best rates we could get, and even managed to secure it right before it rose. I cannot recommend their service enough!read more
Joop Tange
Joop Tange
10:01 23 Feb 20
Absolutely pleasure to work with them. They were quick and clear with collecting all kind of documents. Quick in replying emails, whats app messages etc. Nice communication. 1 point of attention for them. dubbelcheck the holiday back-up. But overall; i would choose them again. Trustworthy and helpfull. I didn't know any of germanlaws etc. They helped me out with everything to understand well. Thanks againread more
W C
W C
18:24 14 Feb 20
LoanLink helped me secure financing at a great rate and I am thoroughly grateful. My representative in Berlin was Jan, and he responded promptly and kindly to all my communications--honestly this was the best service I've ever had since arriving in Germany, and I'm glad it was on such an important front =) I would HIGHLY recommend LoanLink for serious inquiries about financing, they do an impeccable job.read more
王紹權
王紹權
20:56 11 Feb 20
Super supportive institute and strong agent. The process are clear and straight-forward. Agent i met is a great guy and very supported. Recommended!read more
Melissa Rodrigues
Melissa Rodrigues
19:59 11 Dec 19
Highly recommend LoanLink! Jan was our advisor and he was everything you could ask for -- dependable, helpful, respectful, quick to answer our questions, always thinking a step ahead, and very good at explaining complex mortgage topics! So happy with LoanLink.read more
Ana Batanero
Ana Batanero
17:07 03 Nov 19
The way to go to get a mortgage! LoanLink really helped me in the process of applying for a mortgage. The service was really quick and I got a really good interest rate. The agent that supported me was always super fast in the communication and always available for a call. Highly recommended.read more
Don Won Lee
Don Won Lee
16:25 17 Oct 19
Kind, quick and accurate. The best service I’ve ever had in Germany!
Marco Gonsalvi
Marco Gonsalvi
10:21 24 Sep 19
Awesome service. The Loanlink team is simply fantastic. Clear website, accurate information, easy to read comparison of different options and timely responses to any questions I had. I would not hesitate to use Loanlink again in future. Definitely recommended.read more
Nik Eleftheriou
Nik Eleftheriou
12:06 05 Sep 19
Fantastic experience with Jan and co at LoanLink. They were helpful and patient the entire way through. Thanks!
Nefidova Polina
Nefidova Polina
16:06 30 Jul 19
Me and my husband are happy that found this company. The guys are fast reactive, always very helpful. They speak a very good English, which is very important for us. Definitely can recommend to work with them.read more
ning zhong
ning zhong
15:47 23 Jul 19
Jan is a very good person. He gave us patient and careful guidance and helped us get a loan successfully. Loanlink is the right choice for getting financial support during property purchase.read more
Nikita Belokopytov
Nikita Belokopytov
15:12 12 Jul 19
Open, approachable and very friendly. Jan, the mortgage advisor was with us every step of the way. He was always very friendly, empathic and helpful. He was never trying to sell us something that we did not want and went to an extra mile twice for us. The whole process took about 4 weeks, which is quite normal. Loanlink have helped us to prepare the documents, find a good offer and negotiate an even better interest rate. They have even handled a real curve-ball from the bank in a way that we could not have done ourselves. I wish they made it big and I believe they have every opportunity to do so.read more
Kurt S
Kurt S
09:59 25 Jun 19
Trying to purchase property whilst between 2 countries is a challenging and time consuming task. The LoanLink website was excellent in providing helpful information and also in outlining our options. Jan, our consultant, was always very responsive and guided us through the financial options (in both Deutsch and English language). We're very grateful for the help and the loan that LoanLink was able to broker for us.read more
Nadia Tcherniak
Nadia Tcherniak
13:42 20 Jun 19
I have really enjoyed my whole experience with LoanLink. Both me and my husband speak German and have experience in the German real estate market and we still chose to deal with LoanLink as our mortgage broker. Why? 1) 100% online. We are both working full-time and have little time left for long face-to-face appointments and consultations. I loved the user-friendly interface of LoanLink and the possibility to upload everything online. 2) Our broker, Jan was very responsive and efficient. We got an approval in no time. 3) We got a GREAT offer from the bank through LoanLink and are very happy with it. When we will be buying the next property, we will definitely use LoanLink again.read more
Hnin Wah
Hnin Wah
12:12 12 Jun 19
As being a Non-EU citizen with limited German language, it was impossible to get mortgage loan before I found out about LoanLink. Stefan Köppen is my mortgage advisor from LoanLink. He is extremely professional and very responsive by answering all my questions immediately during the process of getting the loan to buy my first home in Germany. Not only he did get me a mortgage loan but also he had the best customer service I've ever seen to help me becoming first time homeowner. Thanks Stefan (LoanLink), I appreciate your great work!read more
Yuriy Nazarkin
Yuriy Nazarkin
08:20 07 Jun 19
Just signed my mortgage contract! Support which received from LoanLink colleagues was impressive, helped me a lot during all steps of application. Nice and professional people to work with. 100% recommend!read more
Ziad El-Jayyousi
Ziad El-Jayyousi
06:08 25 May 19
Highly recommended. Professional and Friendly team, prompt communications. Additional help provided when needed. The whole application and approval process from start to finish with the bank mortgage contract in the mailbox was complete within the same business week! Couldn't have had a better service than this, and highly recommend LoadLink!read more
A B
A B
11:04 21 May 19
I can leave only very positive feedback from my experience with LoanLink and especially with my broker Stefan Koeppen. Stefan was always very professional and fast with his actions. He was very well in structuring a deal and always could find alternative solutions when something went in a wrong direction or was not so applicable for me. He was open, transparent, ready to help with valuable advises when needed and very operative/fast (which is not common for Germany). Many thanks and good luck Well done!read more
Marija Koteva
Marija Koteva
07:00 20 May 19
Fantastic experience, they are always available and very knowledgeable for all mortgage-related topics, even for general property market information. I had a specific case with being on a visa, and only a couple of months in Germany and did not think I would be even eligible for a mortgage, but LoanLink found great offers for me. Trustworthy, personal, professional, reliable - I could not thank Stefan enough for helping me get my first home.read more
Thiago Medeiros Araujo
Thiago Medeiros Araujo
16:56 13 May 19
LoanLink was great! Stefan gave us an excellent support! Great option for expats in Germany! He found was an option when other banks said it was not possible! Highly recommended!read more
princess dyanne tuliao
princess dyanne tuliao
19:24 12 May 19
Through Loanlink we were able to find competitive bank loan offer. It was even better than another offer made through the same financing bank. The colleagues are very professional, supportive and available whenever needed. Excellent customer service! 🙂read more
Tracy Comstock
Tracy Comstock
12:40 29 Apr 19
Without LoanLink, I do not think we would have been able to purchase a property here in Germany. Başar was wonderful; he was incredibly responsive, he had a host of contacts who could speak to us for a variety of situations, and he was also just really friendly. He took the complicated process of buying a new build property in a country where we aren't fluent in the language, and made it accessible and easy. I would recommend this company to any ex-pat looking to buy in Germany.read more
linda gunarso
linda gunarso
00:53 22 Feb 19
I found loan link from Google. I tried getting in touch to find detail info on home loan In Berlin. Jan called me and has been assisting me since then until the purchase is finally completed. He is very patient in getting my queries answered and to go through every step following my busy time as a Mother with infant. He is quick to respond and proactive in getting in touch to make sure the loan application in progress. I really appreciate his assistance and patience. Thank you very much.read more
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