Under certain circumstances, owners can repay a real estate loan early without incurring the so-called prepayment penalty. This works if the calculation was incorrectly explained in the contract. The Stiftung Warentest points this out. And explains how those affected should proceed.

If you redeem your mortgage early, you usually have to pay substantial compensation. But this can prevent a kind of joker, which goes back to a little-known change in the law: It applies to all contracts since March 21, 2016, real estate loan agreements and states: A financing bank is only entitled to a prepayment penalty if the contract information about its calculation is correct are. In the event of “insufficient” information in the contract, the money house will receive nothing.

“Finanztest” describes the case of a real estate buyer who wanted to sell his apartment two after the loan agreement was signed. His bank demanded € 4,172 in compensation for your interest loss. Because the customer should actually have only canceled at the end of the fixed interest rate in 2028. In the event of a sale, the borrower can exercise an extraordinary right of termination – but only against compensation from the bank for the early repayment.

New legal situation since 2016

The customer did not want to accept that in the case described by Stiftung Warentest and went to the lawyer. He quickly realized that the bank was not entitled to compensation due to incorrect contractual clauses.

The bank resisted by denying the allegation of an “inadequate” explanation. Problem with a legal clarification: The law does not define the term precisely. But according to Stiftung Warentest, it is clear: the bank information must not be false or misleading.

Lawyer enforces law

But that’s exactly what the client’s lawyer complained about. His most serious objection: The text of the contract gives the impression that the compensation is calculated until the end of the remaining term of the loan – i.e. until full repayment. But that is not allowed.

A bank may only calculate its interest damage up to the end of the fixed interest rate. In the case at issue, this was one year shorter than the term specified in the contract, by the end of which the loan would have been repaid if the conditions remained the same. The bank eventually accepted the attorney’s arguments.

Common mistakes in loan agreements

“Finanztest” lists the most common sources of error in contracts that negate compensation:

  • Fixed interest rates for more than ten years: All contracts of this type can be terminated with six months’ notice as soon as ten years have passed since full payment.
  • Returns on Pfandbriefe: Some contracts from cooperative banks contain the information that the returns on “capital market securities of public debtors” are decisive for the calculation of the interest damage, as Stiftung Warentest writes. Instead, however, the higher yields for mortgage Pfandbriefe should be used.
  • Special repayment: In some loan agreements there is no indication that agreed rights to special repayments in favor of the customer are to be taken into account. This usually lowers the amount of the early repayment penalty compared to loans with fixed repayment.

If the contract text contains one of the errors mentioned, the bank has the buck. The entitlement to a prepayment penalty has expired.