Financing a New House: Is Mortgage Swap Sensible or Not?

Only with justified interest. For us, it is a property that we are still paying off and the fixed interest period still runs for 2.5 years. If the bank does not offer us a loan for the house, we can terminate the loan and pay the prepayment penalty. Otherwise not.

Justified interest for repayment is – like Tolentino – the sale of the property. Otherwise, the bank does not have to let you out, unless it is contractually agreed otherwise.

It is already questionable whether there can be other legitimate interests. The wording of the law is

2Such an interest exists in particular if the borrower has a need to use the object pledged to secure the loan in another way

§490 Building Code paragraph 2. In particular does not mean exclusively. For example, I wanted to refinance my now appreciated condominium by taking out a new loan in order to finance my NBV. With the KfW modules (different legal basis) that was possible. For the main module, ING rejected it. My financial advisor said that this was enough for them and I wouldn't have had time for legal proceedings anyway. But in case of doubt, he calculated chances for me... Well, I can't say anything about the theoretical outcome, it worked out this way anyway. And for the original poster, it is clear anyway with the intended sale. At most, you can offer the bank a pledge swap as an alternative if the conditions of the old loan are that good...

It is questionable whether there can be other legitimate interests. The wording of the law is §490 Building Code paragraph 2. In particular, it means not exclusively. For example, I wanted to refinance my condominium, which has since increased in value, to finance my non-residential building. This was possible with the KfW components (different legal basis). The ING rejected this with the main component. My financial advisor said that was enough for them and I wouldn’t have had time for legal action anyway. But in case of doubt, he calculated chances for me... Well, I can’t say anything about the theoretical outcome, it worked out anyway. And for the original poster, it’s clear anyway with the intended sale. At most, you can offer the bank a pledge swap as an alternative if the conditions of the old loan are that good...

For us, it is the construction of a house on the property with the remaining debt. If the bank does not make us an offer, we can terminate (according to the financial advisors).

And for the OP, the planned sale is already clear anyway. At most, you can offer the bank the collateral swap as an alternative if the conditions of the old loan are that good...

Well, the 2.5% on the "main loan" is certainly not that great at the moment.

We will now see how the house sale goes and how large the financing gap will be.

In principle, we are very satisfied with the bank and in the previous discussions they have also shown themselves to be very cooperative. Especially when buying a house, I find not only the costs/the interest rate important, but also good personal support. For once, it is worth it for me to pay a little more compared to an online bank, even though I am usually more of a saver.

Well, the 2.5% on the "main loan" are certainly not great at the moment.

We will now see how the house sale goes and how big the financing gap will be.

In principle, we are very satisfied with the bank, and in the previous conversations, they have shown themselves to be very cooperative. Especially when buying a house, I find not only the costs/the interest rate important but also good personal support. For once, I am willing to pay a little more compared to an online bank, even though I am usually quite frugal.

I find that a sympathetic approach. However, at 2.5%, I would sell and terminate the loan. You can still request bridge financing or a new loan from them. Or first talk to them about what options they see.

Maybe a compromise will arise.

I can only terminate the loan with a prepayment penalty.
I can’t imagine that it would be worthwhile for me.

Perfect would be if we get exactly enough for our house to close the gap, and after the mortgage swap, we continue financing as usual.

Another good option would be if we get slightly less for the old house, the bank offers us a new deal with a better interest rate including the amount of the financing gap, and waives the prepayment penalty on the old loan.

It remains exciting in any case.. As long as we don’t know exactly how the sale will go, it’s all just speculation anyway.

But that I would buy a house without knowing 100% at the time, I wouldn’t have thought a few years ago either..