German Mortgage

Refinancing Your Mortgage in Germany: Everything you need to know

Getting a german mortgage is a long-term commitment settled by the duration of your chosen fixed interest: a minimum of 5 years and a maximum of 30 years. However, that fixed interest has an expiration date, and there’s usually residual debt – making it necessary for borrowers to refinance their mortgage. 

Since the current interest rates are low, homeowners can take advantage of that by repaying their loans early and restructuring their debts. It’s possible to get a better interest rate with a new bank and potentially save thousands of euros.

It’s good to know, then, what your options are regarding german mortgage refinancing, and getting information on what measures you can take and when. In this article, we’re going to focus on everything you need to know, including:

  • What is mortgage refinancing,
  • The options available to refinance a mortgage,
  • What the saving potentials are,
  • What documents you will need,
  • And other essential tips to get the best deal.

Keep reading to discover all the answers.

What does mortgage refinancing in Germany mean?

In most cases, the fixed interest period of a mortgage expires after 5, 10, or 15 years, leaving a residual debt that borrowers usually can’t pay off in a single sum. That’s where refinancing comes into play: renegotiating the terms of your home loan to find a better repayment plan.

The sooner you start looking for the cheapest refinancing models for your loan, the better your opportunities for comparing different providers and finding the best deal to refinance your mortgage.

And you don’t even have to wait until your fixed interest rate has expired!


What options do I have for refinancing my mortgage?

Do you maybe want to change the loan installments? Or do you want to make special payments? You have the option of switching banks and renegotiating the loan terms, for example. 

At the same time, you can adapt the new credit to your current personal and financial situation. 

You can choose two variants to refinance a mortgage: the prolongation of the loan and the rescheduling of the financing (aka refinancing). If you’re looking to secure an attractive interest rate while the market offers favorable conditions, you can do so with a mortgage refinance. This way, you can define future needs in advance.

What is a prolongation?

With a prolongation, you accept your previous lender’s offer for the continuing financing of the mortgage. As the borrower, you sign a new interest agreement, and the loan for the mortgage financing continues with the new conditions. 

In most cases, you will receive an offer with new conditions for the mortgage from your bank a few months before your fixed interest rates expire. As the borrower, this process is very straightforward. However, the offer from the previous financer is not necessarily the cheapest for refinancing your mortgage. That’s why you should carefully compare different loan offers before the expiration of your fixed interest loans and possibly refinance.

What is mortgage refinancing (Umschuldung)?

German Mortgage refinancing involves concluding a follow-up financing for your property with a new lender. Refinancing your mortgage can save you a lot of money. 

When you refinance a mortgage in Germany, the new lender will take over the loan at the end of the fixed interest period and receive the mortgage as credit security. When refinancing, notary and land registration fees for the mortgage occur. However, they usually amount to just a few hundred euros, making the costs to refinance your mortgage manageable.

Even an interest advantage of a few tenths of a percent can create higher interest savings than the fees.

Which one has more advantages?

In general, the following applies: The higher the remaining mortgage debt at the time of the follow-up financing, the more sense it makes to refinance with a cheaper loan offer.

If the debt at the end of the fixed interest period is relatively low, then a switch for the remaining period might not be worth it. Maybe you even have the opportunity to pay the remaining debt with your own funds without any need to prolong or refinance your mortgage!  


In short, if you have already completed 5 years of your current mortgage, you are eligible to apply for refinancing.

The table below shows you which action you can take in different periods. Use it to find out if you’re eligible to apply for refinancing. 

Period Scope for action
The credit agreement has been running for more than 10 years You can terminate and refinance your mortgage at any time with a notice period of 6 months.
Only 12 months (or less) are left until the fixed interest rate expires You can either stay with the same bank and extend the loan (rollover) or terminate the contract now and carry out a debt restructuring.
Your mortgage will expire in the next five years, but will still last longer than 12 months You still cannot terminate the mortgage, but you can take out a forward loan to pay off the remaining debt later.

We’ll look into each option in detail below.

Your credit agreement has been running for more than 10 years

You are eligible to take advantage of the low-interest rates by canceling your old mortgage! Based on article §489 BGB, after 10 years you are eligible to cancel your mortgage contract and switch to a different lender. 

You can start to refinance the remaining amount with a notice period of 6 months. This special right of termination does not end, which means you can still use it after 11 years, 20 years, or 30 years. 

This applies regardless of how much longer your fixed interest period is left.

Only 12 months are left (or less) until the fixed interest rate expires

Your fixed-interest period is about to expire, the contract with your old bank will end automatically and there will normally be an outstanding balance remaining. The previous bank must inform you at least 3 months before the end of the contract if it is willing to extend it.

If not, you have enough time to find a new bank. Usually, the bank will also make you a new offer, and it’s rare for a bank not to continue the mortgage. 

You can check with your current bank to see whether they will let you out of the contract a few months earlier (although you might have to face an early repayment penalty). If that’s not an option, inform the bank in writing that you do not wish to continue the current property loan after the fixed term ends. 

Only do this if you already have a loan commitment from a new bank in your pocket! Our mortgage experts can help you to find the best offers. Please feel free to get in touch with us to better understand your savings potential by signing up here

Your fixed term will end within the next five years, but will still last longer than 12 months 

You may now take out a forward loan with a new bank for debt restructuring. The term loan will be dated so that it covers the remaining debt when your current mortgage expires – this way, you can save the current interest rates for down the line. This is particularly useful if you expect interest rates to rise in the coming years. 

Without a forward loan, you would be at the mercy of higher interest rates and would have to finance your follow-up financing in those terms.

How long does it take to refinance my german mortgage?

It might take anything from 30 to 45 days. 

However, it’s hard to predict exactly, as the period might change according to your financial situation, property valuation, inspections, and other third parties.

For a smooth transition, it might be worth talking to an independent mortgage advisor.

Can I save money with a house refinance?

A debt rescheduling is worthwhile if the new loan’s interest rate is 0.2 percentage points better than the old one.

But overall, the probability that you will get a better interest rate by switching to another bank is very high. Remember that even a few percentage points behind the decimal point can mean savings of thousands of euros over the years! 

A prolongation with your house bank is rarely worth it. As you have already paid off part of your mortgage, the loan-to-value ratio (LTV), i.e., the value of the loan compared to the value of your house, has already decreased. 

On the other hand, the value of your property may have increased, which will further reduce the loan-to-value ratio and thus your future interest rate.

What interest rate can I expect?

This really depends on how much your property is currently worth compared to the outstanding balance (loan-to-value ratio). 

The lower this ratio is, the lower your interest rate will be. As interest rates can vary daily (and even regionally!), it’s best to get personalized quotes from a mortgage advisor such as LoanLink.

Refinancing: A new bank or my current bank?

As mentioned before, your current bank might make you a prolongation offer after your fixed interest period is over. However, you might be missing out on more attractive refinancing rates if you don’t do your research properly. 

Make sure to compare it with other lenders to find out what’s more promising in the long term. It might sound like a lengthy and bureaucratic process, but independent mortgage advisors can do the research for you.

What documents are necessary?

In general, you need the same documents used when initially applying for your mortgage (possibly even less). 

Your bank will request the necessary documents, or you will receive your personalized document list in your document section after you’ve signed up on LoanLink24.

What’s the best way to get started, though?

Refinance your mortgage with LoanLink

As the borrower, you shouldn’t be afraid to refinance your mortgage – the costs are much lower than most people think. 

You can sign up on LoanLink to explain to us more about your refinancing project and your current mortgage and check some other mortgage products. Then, we will compare credit offers and interest rates from countless credit providers for you and find the best financing solution for the transferred loan. This comparison is free of charge and non-binding, meaning you are not obligated to refinance your mortgage. You can check your dashboard to receive your personalized offers and schedule a call to discuss them.

After that, upload your documents, and let us take care of the rest!

After signing the new credit agreement, the involved credit institutions usually handle the transfer of the loan among themselves. You, as the borrower, don’t have to do anything. That makes refinancing mortgages very straightforward.

Our goal is to help you find the best home loan.

We are happy to answer any questions. Contact us via email at or by phone at 0800 05 28000. You can also start with the LoanLink home loan calculator.

Got a question about the real estate valuation or home purchase process for non-German resident in Germany? Contact us!

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