Refinancing with KFW special repayment, is that possible?

I wondered today if it would be possible to simply refinance a KFW loan with a 100% special repayment option. We agreed on 1.6% for 10 years.

If you were to pay this off with a regular loan, which currently stands at around 0.6% for 10 years, you could save a lot of money.

Where is my thinking error???

We have just asked our bank about this as well and they said they will do it. However, unfortunately, we have not yet received the confirmation after execution, so the KfW process is not yet completed. As soon as we have submitted it, KfW has processed it and credited the bonus, we can initiate the refinancing with the house bank. This is the information from our house bank...

I don’t see a problem there. You just have to get the remaining debt from somewhere. The forwarding bank doesn’t care where from.

But I suspect that prepayment until the doctor comes is probably even cheaper in terms of interest, right? In the end, a monthly open-end repayable 153er (the old one) is nothing other than a loan with a variable interest rate. We will invest 30k€ at the beginning of next year. There are still 65k€ outstanding. Which will also be gone in 3 years. That’s the plan. Therefore, I don’t think refinancing is worthwhile.

If you were to replace this with a standard loan, which currently stands at about 0.6% for 10 years, you could save a lot of money.

Where is my flaw in reasoning???

KfW is subordinate. You will get a corresponding condition from your bank (only the bank that financed the first lien can proceed). Is it worth it? You have to ask about the condition.

I was wondering today if it would be possible to simply refinance a KFW loan with a 100% prepayment option. We have it fixed for 10 years at 1.6%. If you were to repay it with a regular loan, which currently is about 0.6% for 10 years, you could save a lot of money. Where is my thinking wrong???

yes, it is possible, no thinking error. but it only works with the bank where you also have your main loan due to the land register. AND the bank has to agree. BHW declined that for us for the next 3 years, because from the 1.6% interest you pay, the bank is allowed to keep 0.75%. and that is more than what they would earn with you afterwards.

Yeah, the catch is the lien to the bank in first priority.