Prepayment penalty upon termination of the loan agreement

Hello everyone,

my parents have offered to transfer their family home to me. My parents would then build a new home suitable for their age and receive a monthly retirement allowance from us. However, we only bought a house five years ago. After a phone call with the bank, I now know the approximate amount of the prepayment penalty.

Now I have come across some information. The bank only has to accept the termination if there is a "legitimate interest" in the termination. Otherwise, the amount of the prepayment penalty is variably set by the bank. Does that mean the bank can also refuse if we terminate? At the time of termination, the new building would already be completed, we would have moved, and the sale of our current house would be finalized...

The bank officer stated the reinvestment interest rate in mortgage bonds at below 1%. The prepayment penalty calculators online (e.g., on Test.de) assume a higher interest rate. Which ones are correct and where can I find the current interest rates that must be applied according to the BGH ruling?

We only receive the bank’s claim after termination. What options are there to challenge it if the bank’s prepayment penalty demand is too high? Do you have to sue immediately?

I hope I have formulated the situation/questions understandably and maybe someone has a few answers for me... Thanks already...

Best regards Craigh-na-dun

The sale of the property is an accepted and cited reason by the Federal Court of Justice [BGH] to terminate the loan. The bank then has a claim for prepayment compensation.

The prepayment fee [VFE] cannot be calculated with just one(!) mortgage bond interest rate. I assume an annuity loan. This involves ongoing, usually monthly interest and principal payments. For the calculation, each payment must now be discounted for the remaining fixed interest period with an individual interest rate. The interest rates can be found, for example, in the payment series of the Bundesbank.

By the way, I am not aware of a single online calculator that calculates correctly. Apart from the fact that you have to analyze your loan contract and extract the facts relevant for the calculation, the online calculators known to me cannot correctly process these data. The calculation results are then incorrect and can be off by several thousand euros.

It requires specialized software and some expertise to feed the software. Such a calculation is then also admissible in court. So if your bank has miscalculated, you can, as a first step, hire a lawyer to write a polite letter. That often helps. Some lenders remain stubborn – then the only option is to go to court.

Thank you very much for the detailed and helpful answers!!!

In our case, it is about our own property (the house and loan belong to my husband and me) that we would sell. There is no timing/financial problem with my parents. A bridge financing is not necessary. Only for us could it become tight if the house sale is significantly delayed and we have to continue paying both the retirement home AND the installments to the bank for several months. We have already considered a pledge swap, but this alternative is excluded for my father.

I am a bit afraid of potentially additional costs arising from lawyer and court fees. Therefore, we still need to think this step over carefully.

Best regards
Craigh-na-dun