German Mortgage Early Repayment: Fees and Strategies

Early mortgage repayment in Germany is usually possible but may incur fees called Vorfälligkeitsentschädigung. These fees compensate the bank for lost interest income and typically range from 0.5% to 1% of the remaining loan amount for the first 10 years.

Fees decrease over time and may disappear after 10 years. Most banks allow 5-10% annual overpayments without fees. Before making early repayments, calculate whether the interest savings outweigh the fees.

Consider your financial goals and whether the money might be better used elsewhere. Some strategies include making regular overpayments to reduce the loan term, saving for a lump sum payment, or refinancing with a new bank.

Remember that early repayment affects your tax situation, as mortgage interest is tax-deductible in Germany. Consult with a financial advisor to determine the best strategy for your situation.