Early repayment penalty after divorce: when it applies and how to avoid it

The Vorfälligkeitsentschädigung (early repayment penalty) is for many people the biggest financial uncertainty factor in a divorce. The fee can be significant, but does not arise in every separation scenario.

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What is the early repayment penalty?

The early repayment penalty (Vorfälligkeitsentschädigung) is a payment to the bank when a fixed-rate mortgage is repaid before the end of its fixed-rate period. It compensates the bank for lost interest income.

In German mortgage financing, borrowers typically agree a fixed-rate period (Zinsbindung) — the period during which the interest rate is locked in. If the loan is repaid before this period ends, the bank loses expected interest income. Under certain conditions it can claim this loss.

Divorce alone does not trigger this fee. This is an important point.

How high can the early repayment penalty be?

With € 280,000 remaining debt, 3.5% interest rate and seven years of fixed-rate period remaining, the early repayment penalty can be in the range of € 25,000 to € 35,000.

Remaining debt

€ 280,000

Example figure

Fixed-rate period remaining

7 years

Remaining term

Possible costs

€ 25–35k

Rough guide

How can you avoid the early repayment penalty?

Change of borrower instead of loan termination

If one partner takes over the property, the existing loan may be able to continue. Only the borrower is changed. This requires bank approval but can often avoid the early repayment penalty.

Review of § 490 BGB

§ 490 BGB provides a special termination right where there is a legitimate interest. A property sale can be such a case. Important: § 490 BGB does not automatically mean no early repayment penalty applies.

Wait until the end of the fixed-rate period

If the divorce situation allows it, waiting until the end of the fixed-rate period may be cheaper. The loan can then be restructured without a classic early repayment penalty.

Banks frequently make errors in the calculation

Calculating the early repayment penalty is complex. Errors can occur when overpayment rights are not taken into account or when contract details are incomplete.

Thomas Brauner can check the bank's calculation for plausibility and assess whether a more detailed legal review is warranted. This prevents you from accepting a large claim without scrutiny.

Frequently asked questions

: It is calculated based on the interest loss suffered by the bank. The key factors are remaining debt, agreed interest rate, current market rates, remaining fixed-rate period and any contractual overpayment rights.
: Yes, possibly. If the loan continues through a change of borrower rather than being repaid early, the early repayment penalty can often be avoided.
: § 490 BGB allows extraordinary termination under certain conditions. However, the bank can in principle still claim compensation for the loss incurred.
: This depends on ownership shares, the loan agreement, sale proceeds and any internal agreement. As regards the bank, borrowers are liable under the contract; internally a different split can be agreed.

Check the penalty before you sell or terminate

An early repayment penalty may be avoidable, reducible or miscalculated. Thomas Brauner reviews your situation free of charge and without obligation.

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