What does „Remortgage“ mean in Germany?
Remortgage or follow-on financing means replacing your existing loan with a new one – often with a different lender, using the same property as security. If you want to remortgage property in Germany, you usually do it to get better interest terms or to act more flexibly after the fixed-rate period ends.
Why do owners remortgage?
- Lower interest – At the end of the fixed term (often 10 years), look for better rates.
- Increase repayment / shorten term – Higher monthly payments allow earlier payoff.
- Forward loan – Lock in a rate up to five years before the current one expires.
- Special termination after 10 years – Six months’ notice, switch without penalty.
- Release equity (cash-out) – Take a larger loan and receive the difference – but fees apply.
How does remortgaging work?
- Best timing: 6–12 months before the end of the fixed period. Plan forward loans even earlier.
- Compare offers: With or without a broker – services like Finance for Expats, Interhyp etc. are often worth it.
- Submit documents: Proof of income, ID, land register excerpt, etc.
- Completion: Notary and land register entry (around 0.2%) are required.
Costs and pitfalls
- Notary/court: around 0.2%
- Early repayment charge: if you switch before 10 years
- Forward premium: usually 0.1–0.5% above current rates
- Cash-out fees: the source of funds can have tax implications
Pros and cons at a glance
Pros:
- Lower interest rate → save every month
- Option to shorten the term
- Lock in rates in advance with a forward loan
- Release equity for liquidity
- After 10 years: switch without penalty
Cons:
- Notary and land register costs
- Early repayment costs if you exit early
- Forward premiums add to total cost
- Cash-out comes with fees and tax effects
- Admin and paperwork
When is remortgaging worth it?
- Shortly before the fixed period ends
- Interest rates have fallen noticeably
- You want faster repayment or more liquidity
- You’ve been in the loan for more than 10 years
Conclusion
Remortgaging property in Germany offers attractive options before and after the fixed period: interest savings, flexibility, shorter terms or equity-based liquidity. Still, costs, premiums and red tape should be weighed carefully.
Ready to take the next step? Visit Immojourney to discover tools, insights and financing options around remortgaging property in Germany – tailored to your goals.