Prepayment penalty

Hello Jens,

due to the small time savings or a relatively low amount in dispute of approximately €1800 minus X (you probably won’t reduce the prepayment penalty to zero), it probably makes little sense to challenge the bank’s claim, especially since you are not obliged to accept it (this is different in the case of forced sales). With this amount, I would simply negotiate with the bank and see what they are willing to accept. For larger amounts for the prepayment penalty (from €5,000 upwards), I would involve a specialist lawyer for banking law, they often recover some thousands of euros with reasonable effort.

In your case ... if you define 50% or €900 as a savings target, you don’t know if that will work and secondly, attorney fees will also apply if successful. (Expected) hassle and time expenditure, in my opinion, are not in reasonable proportion.

If you are still interested, send me a private message.

Best regards
Dirk Grafe

Most banks currently only make money with mortgage financing because they do not refinance in a structure-congruent manner. That means they take the "cheap" money from savings accounts (payable at any time) and lend it out expensively (for 10 or more years). However, if the loan had to be refinanced on the capital market (e.g. through covered bonds), many inexpensive providers would have negative margins on their books.

I have not yet seen an offer below the market interest rate (except for promotional loans). Although the margin through maturity transformation is indeed greater than with structure-equivalent refinancing, I do not want to know what would happen with an inverse yield curve.

The golden banking rule states that you should basically refinance with matching maturities. Although no one really adheres to this (entrepreneurial risk), the margin still has to be right when refinancing with matching maturities. And thanks to the large volumes, banks still make quite good profits from this. I would like a loan at the covered bond rate plus a risk premium; then I would have the biggest grin on my face, but unfortunately, that does not exist.

Hello

only consumer protection can recalculate that, for example. Basically, you can now conclude the follow-up financing through a forward loan anywhere. The first 6 months should be without an interest surcharge.

Where is the KfW loan located? Also at DG Hyp? You are probably stuck with DG Hyp because of the mortgage....

First of all, thanks to everyone for the feedback!

The KFW loan was also through DZ HYP, but was replaced on 31.3. by a new loan from VR Bank, which at the time did it through DZ HYP (now on their own). The necessary amount for the DZ HYP loan (which had a 15-year fixed interest period) is also available from the new VR Bank loan, callable either now or in November when the 10 years + 6 months are up. We could have also paid off the KfW loan in cash, but that would have been nonsense because of taxes and another owner-occupied property.

Hello Jens,

due to the small time savings and a relatively low dispute value of ~1800€ minus X (you probably won’t bring the prepayment penalty down to zero), it probably makes little sense to challenge the bank’s claim, especially since you are not obliged to accept it (this is different with emergency sales). I would simply negotiate with the bank for that amount and see what they are willing to accept. For larger amounts for the prepayment penalty (from 5,000€ upwards), I would involve a specialist lawyer for banking law, they often manage to recover several thousand euros with reasonable effort.

In your case ... if you define 50% or 900€ as a savings goal, you don’t know if it will work out and secondly, attorney fees also apply in case of success. (Expected) hassle and time expenditure, in my opinion, are not in a reasonable ratio.

If you are still interested, send me a private message.

Best regards
Dirk Grafe

Starting a dispute there, I think as you also wrote, makes no sense; even if the bank would reduce the prepayment penalty somewhat, it does not make sense mathematically, so we will just wait until November now. My question was ultimately motivated by whether the low reinvestment interest rate is okay, which it probably is.

Best regards,
Jens

That cross-selling is always a good source of income is probably undisputed, but where do you get your wisdom from? I claim the opposite and say that especially long-term construction financing is a solid foundation of long-term interest margin contributions for many banks and creates the opportunity to survive permanently as a bank at all and not have to live from hand to mouth.

Now it depends on which banks we are talking about... rather small, regional savings banks and cooperative banks or more the big ones like Deutsche Bank and so??? I work in this field and can estimate the margins quite well and especially with the big banks, the construction financiers are the basis, but not the margin generators; with small ones it can look quite different... But we don't need to go deeper into that here. However, I assume that he doesn't need to negotiate anything there because it doesn't bring anything. My opinion!!!

I assume, however, that he does not need to negotiate anything there because it brings nothing. My opinion!!!

Exactly!