A Forward-Darlehen is one of the most powerful financial planning tools available to German mortgage holders. It allows you to lock in today's interest rates for a mortgage that will not start for up to 60 months — giving you certainty about your future financing costs long before your current Zinsbindung expires.
This guide covers everything you need to know about Forward-Darlehen: how they work, what they cost, when they make strategic sense, and the pitfalls to avoid. Whether you are approaching the end of your current fixed period or simply planning ahead, understanding this product is essential for smart mortgage management.
A Forward-Darlehen (forward loan) is a mortgage contract you sign today, at today's rates, but the loan does not start (and payments do not begin) until a specified future date — typically when your current mortgage's Zinsbindung expires. In essence, you are 'pre-ordering' your refinancing at a guaranteed rate.
The bank charges a premium (Aufschlag) for this rate guarantee, which increases with the length of the forward period. This premium compensates the bank for the risk that market rates may be lower when the loan actually starts — in which case they are locked into lending you money at a below-market rate.
The forward premium (Aufschlag) is the key cost element of a Forward-Darlehen. It is expressed as a percentage per month of forward period and typically ranges from 0.01% to 0.03% per month, depending on the bank and market conditions.
As these examples show, the premium adds up quickly for longer forward periods. A 60-month Forward-Darlehen at 0.03%/month adds a full 1.80% to your rate — which means it only makes sense if you expect rates to rise by more than 1.80% over the next 5 years.
A Forward-Darlehen is not always the right choice. It makes strategic sense in specific market conditions and personal circumstances:
When your Zinsbindung approaches its end, you have three main refinancing options. Understanding how a Forward-Darlehen compares to the alternatives is crucial:
Your current bank offers you a new rate for the remaining balance. This is the simplest option — no paperwork, no Grundschuld transfer, no new credit assessment. However, banks know that inertia favors them, so Prolongation offers are often not the most competitive. Always compare before accepting.
Move your mortgage to a different bank offering better terms. The new bank handles most of the paperwork, including the Grundschuld transfer (which costs approximately €300-€500 in notary and land registry fees). The potential rate savings of 0.2-0.5% compared to Prolongation more than offset these costs on any substantial mortgage.
Secure today's rates for your future refinancing, whether with your current bank or a new one. The Forward-Darlehen can be combined with either Prolongation or Umschuldung — you are not limited to your current bank. In fact, getting Forward-Darlehen quotes from multiple banks is recommended.
The biggest risk is that rates fall after you lock in your Forward-Darlehen. You are then stuck with a higher rate (including the premium) while the market offers better terms. Since Forward-Darlehen are binding, you cannot simply walk away.
If you try to cancel a Forward-Darlehen after signing, the bank can charge a Nichtabnahmeentschädigung (non-acceptance penalty). This is calculated similarly to a Vorfälligkeitsentschädigung and can amount to several thousand euros, depending on the loan amount and remaining term. Some banks may negotiate cancellation terms, but you should not count on this.
If you need to sell your property before the Forward-Darlehen starts, you may be in a difficult position. You have a binding loan commitment but no property to secure it. This can trigger the Nichtabnahmeentschädigung. Some banks offer portability clauses that allow the Forward-Darlehen to be applied to a new property, but this is not standard.
In the current rate environment, with 10-year rates around 3.0-3.5% and the ECB expected to continue easing, the case for Forward-Darlehen is mixed. If you believe rates will decline further, locking in now may not be optimal. However, if your Zinsbindung ends within the next 12-18 months and you cannot afford the risk of rates not declining (or rising), a short Forward-Darlehen provides valuable insurance at a reasonable cost.
The sweet spot for Forward-Darlehen in the current market is a 6-18 month forward period, where the premium adds only 0.12-0.36% to your rate. Beyond 24 months, the premium starts to erode the economic case unless you have a strong conviction that rates will rise significantly.
The forward premium on a Forward-Darlehen is part of your interest cost and is therefore tax-deductible for rental investment properties (Kapitalanlage), just like regular mortgage interest. For owner-occupied properties, mortgage interest is not tax-deductible in Germany, so the premium is a pure cost.
Most German banks offer Forward-Darlehen with a forward period of up to 60 months (5 years). Some banks limit this to 36 or 48 months. The longer the forward period, the higher the premium (Aufschlag) added to the base rate. Standard premiums range from 0.01% to 0.03% per month of forward period.
Yes, a Forward-Darlehen is a binding contract. Once signed, you are obligated to take the loan at the agreed rate on the specified date. You cannot simply walk away if rates drop in the meantime without incurring a Nichtabnahmeentschädigung (non-acceptance penalty), which is calculated similarly to a Vorfälligkeitsentschädigung.
Yes, and this is actually one of the most common uses. You can arrange a Forward-Darlehen with a new bank to refinance your existing mortgage when the Zinsbindung ends. The new bank offers you their rate plus the forward premium, and the Grundschuld is transferred on the refinancing date.