Follow-Up Financing: When to Act – and the Three Paths You Can Take
What this is about
Very few German mortgages are paid off when the first fixed-rate period ends. After 10 or 15 years there is almost always remaining debt, and the interest rate for it gets renegotiated – that's follow-up financing (Anschlussfinanzierung). Unlike at the original signing, the property is now partly paid off and has usually gained value: your loan-to-value ratio is lower, which makes you an attractive customer for banks. That's exactly why comparing offers pays off here – your current bank knows this too, and prices its renewal offers accordingly.
The timeline: what to do when
- 5 years to 12 months ahead: Forward loans become available from roughly five and a half years before the fixed period ends – relevant if you expect rising rates and want planning certainty.
- 12–24 months ahead: Determine your remaining debt, gather first comparison offers, and roughly calculate what payment is realistic going forward.
- 3 months ahead at the latest: Your bank will usually contact you with a prolongation offer by now at the latest. This is the last sensible moment to compare – negotiating under time pressure rarely goes well.
The three paths compared
| Path | What happens | Who it suits |
|---|---|---|
| Prolongation | Extension with your current bank, usually without new documents or checks | Convenient if the offer is in line with the market – still worth verifying |
| Refinancing | Switch to another bank; the land charge is assigned to the new lender | When other banks are noticeably cheaper – switching costs (land-charge assignment, usually a few hundred euros) are often smaller than expected |
| Forward loan | Lock in a rate for the future, at a premium per month of lead time | If you expect rates to rise and want to freeze today's rate |
For forward loans: the premium grows with the lead time (roughly 0.01–0.03 percentage points per month is typical). It's a bet on rising rates – if they fall instead, you still pay the locked-in, now more expensive rate. And as a rule, you're obliged to actually draw the loan.
The 10-year exit right: § 489 BGB
Less well known but valuable: under § 489 (1) no. 2 of the German Civil Code (BGB), you can terminate a property loan ten years after it was fully disbursed at any time, with six months' notice – without an early-repayment penalty, even if the fixed-rate period officially runs 15 or 20 years. Anyone who locked in a long fixed rate during a high-rate phase can exit early into cheaper terms; anyone who locked in cheaply simply never uses the option. If your fixed period is longer than 10 years, that date deserves a firm calendar entry.
What this means in today's rate environment
For many households that financed between 2015 and 2021 at rates around 1%, the follow-up financing becomes a reality check: at today's roughly 3.8–4.3% (current rate report), the monthly payment can rise noticeably despite a lower remaining debt. The most important preparation is simply running the numbers: how high will the remaining debt be, what payment results at today's rates, and does that fit the household budget? Knowing this 12–24 months ahead gives you room to react – with extra repayments, a longer term, or a forward rate secured in time.