Premature sale (not fully paid off) property

Hello,

we would like to acquire property in the near future. At the moment, we are dealing with the financing.

Assuming we want to sell the property prematurely, i.e. before the financing is completed (e.g. due to financial distress, moving, or whatever...).

How would that work in detail?
Can I simply sell the property and then use the money to repay the loan? There must be fees involved, right?

Regards

In principle, this works. Since the bank has the property as collateral, it will have to agree. However, it will do so provided that it is ensured that you can fully repay the loan.

The problem is the prepayment penalty that compensates the bank for its loss.
If interest rates rise, the bank does not incur any loss, except perhaps administrative costs.
If interest rates fall further, you have to compensate this loss as a prepayment penalty.
The bank then calculates the interest loss between your loan under [Ausnutzung der Sondertilgung- Möglichkeit] until the earliest possible [Ablösezeitpunkt] and a newly issued loan.

Hello kiesel24,

Musketier has written that correctly. The prepayment penalty is not just a few hundred euros. There are calculators on the internet where you can enter hypothetical numbers and see what comes out. If I sell my current house, I will face about €20,000 in prepayment penalties. Just as a guideline.

But it also depends on the term of the financing. And where you financed it. Some KfW loans, for example, can be paid off in full at any time free of charge.

After 10 years, you can usually also cancel a financing, even if the fixed interest period is longer.

But the best advice for this will come from your trusted bank.

After 10 years, anyone can cancel such financing.

After 10 years, anyone can terminate such financing.

RIGHT, but the crucial point is that no prepayment penalty applies then.

RIGHT, but the crucial thing is that no prepayment penalty applies then.

nothing.
it's EU law.

what matters is how much credit the borrower still has outstanding and what the market value of such a property is.

regardless of the chosen fixed interest period, according to the EU, the contract can be terminated after 10 years.
there is no prepayment penalty, it’s only about value and credit debt.