The early repayment of a construction loan can offer financial benefits, but also cause costs. In order to avoid high fees, borrowers should know the conditions and possible consequences of early replacement.
What is a prepayment penalty?
When repaying a real estate loan early, the bank can request a prepayment penalty, according to the consumer center in an online contribution. This serves as a compensation for the lost interest income that the bank arises from the premature replacement of the loan. The calculation of this compensation depends on factors such as the remaining term of the loan, the amount of the remaining debt and the agreed interest rate. The longer the remaining term and the higher the interest rate, the higher the compensation can be.
Right of termination after ten years
According to Section 489 of the Civil Code (BGB), borrowers have the right to terminate their real estate loan after ten years since a complete payment period of six months without having to pay a prepayment penalty. This right of termination exists regardless of the originally agreed interest binding period.
Variable interest rates and special repayments
In the case of loans with variable interest rate, borrowers can cancel with a period of three months without having to pay a prepayment penalty. In addition, many loan contracts offer the possibility of special repayments, as a Sparkasse online contribution reports. By contractually agreed special repayment rights, borrowers can make additional payments to reduce the residual debt without causing additional costs. It is advisable to check the loan contract for such clauses and use these options to reduce the total cost of the loan.
Incorrect cancellation instructions
In some cases, incorrect cancellation instructions in the loan contract can lead to borrowers can still revoke the contract after years, as a contribution by DB lawyers explains. A successful revocation enables the loan to be replaced prematurely without paying a prepayment penalty. It is advisable to have the contract checked by a specialized lawyer or a consumer advice center in order to uncover possible errors.
Negotiation with the bank
An open conversation with the bank can also be helpful. In some cases, banks are willing to waive or reduce the prepayment penalty, especially if the borrower plans to reschedule or follow -up financing at the same institute, the Sparkasse continues. It is worthwhile to obtain various offers and carefully compare the conditions, as it is concluded.
D. Maier / Redaktion Finanzen.net