Lower Interest Rates, Lower Costs, Faster Debt Free


When the remaining amount of a real estate loan is financed with a new lender, the process is called mortgage conversion. Debt conversion makes sense if the new conditions are more favourable. Even if the previous lender is not willing to finance the request for a higher loan amount, conversion can make sense.

Mortgage conversion when the fixed interest rate period expires

The simplest type of mortgage conversion is when the fixed interest rate period or term of your previous loan contract period expires and you conclude the new loan / Mortgage contract for follow-up financing with a new provider.

Termination in the event of fixed interest rates or loan terms of 10 years and more

At the end of the 10th year, the borrower is entitled to terminate the remaining mortgage or part of it by exercising the unilateral special right of termination (Section 489 Paragraph 1 No. 2 BGB) without prepayment penalty, subject to a notice period of 6 months. If necessary, the borrower can settle the remaining debt with a new loan from another lender.

Termination of variable rate loans

A borrower can terminate the loan with variable (changeable) interest rate according to § 489 Abs. 2 BGB at any time and free of charge with retention of a three-month notice period.


When does mortgage conversion make economic sense?

A mortgage conversion is definitely worth it if the new lender already offers around 0.1% better interest rate. With a term of 10 years, this can mean savings of more than € 1,000.

The mortgage conversion effort is low

  • You apply for and sign a loan contract with the new lender for the amount to be financed.
  • The new lender informs its previous lender about the contract that the mortgage will be paid off at the end of the fixed interest period.
  • The new lender transfers the outstanding mortgage amount to the previous lender on the day of the mortgage conversion and replaces the old mortgage.


Free consultation request / Financial Data (Daten zur Finanzierung)



What are the fees for conversion?

As a rule, both lenders do not charge any fees for the change.

There are only costs for overwriting the land charge in the land register from the previous lender to the new lender, which is around 0.1% to 0.2% of the land charge amount. It pays off with interest savings of 0.05% percent p.a.

Debt Conversion Example


Comparison of offersprevious lendernew lander
Mortgage conversion amount150.000 €150.000 €
interest rate or term period20 Jahre20 Jahre
Interest rate2,4%1,8%
Installments monthly750 €750 €
Notary fee0 €211 €
Lanf register fee0 €177 €
Interest payments for 20 years41.558 €28.471 €
Total efforts41.558 €28.859 €
Remaining dept after 20 years11.558 €0 €
Effort difference12.699 € 
Overall disadvantage
24.257 € 

Lessons from the example:

If the house bank / the previous lender is not willing to offer the same conditions as the new lender, it is advisable to convert. In the example above, if the borrower invests the interest rate differential of 0.6% in the repayment, i.e. instead of 3.6% with the house bank with 4.2% with the new lender, and thus repays his loan higher, he can repay the loan amount in full with the new lender within 20 years. After 20 years, the house bank’s offer still shows a residual debt of € 11,558. If the borrower now also compares the interest payments during the fixed interest period of 20 years, it’s clear that financing with the house bank results in an overall disadvantage or to be precise at an expense of € 24,257.

Early loan repayment before the fixed interest period or term expires

Under certain conditions, the borrower can repay his loan contract early if there is a legitimate interest after another use, for example the sale of the property.

Another reason for early termination may be the borrower’s need for more loan that the previous lender is unwilling to provide. If the new lender now wants to finance these funds and needs the loaned property to secure the financing, the previous lender cannot refuse the early loan repayment.

In such cases, if the borrower wants to terminate his loan contract before the fixed interest period expires, the lender will request a prepayment penalty, i.e. the borrower must pay compensation for the losses incurred by the lender.


Avoid prepayment penalty!

There is no prepayment penalty if the fixed interest period is 10 years or more or a loan with a variable interest rate has been agreed.

Even if the cancellation policy is incorrect, the borrower does not have to pay prepayment penalty.

Other reasons can be:

  • Amicable contract cancelation
  • When the borrower sells a property and finances an equivalent or more expensive property with the same lender.
  • Debtor exchange, i.e. the new property buyer replaces the previous borrower in the loan agreement.


Repayment obligation upon termination

With the justified termination, the borrower undertakes to repay the remaining debt or the canceled partial amount within 2 weeks. Otherwise, the termination is considered ineffective and the loan agreement remains in the form in which it was before the termination.

If the lender terminates the agreement early

If the borrower can no longer pay his monthly instalments, the lender can terminate the contract (usually after several reminders). This can be expensive and may lead to loss of property and additional debt. Therefore, you should talk to the lender in good time and look for common alternative solutions. Do not forget that the lender is also interested in a friendly solution.


Mortgage conversion with us

We are your independent and neutral advisor on all issues related to mortgage conversion. The earlier you come to us, the more extensive and without time pressure we can advise you. After extensive analysis of the conditions of over 400 lenders, we will objectively present you the best loan providers.

We compare the best deals with those from your current lender and go through the pros and cons with you so you can make the right choice.

By the way, our advice, commitment and mediation is non-binding and free of charge for you. Our fees are paid by the lender, no matter who you ultimately chose.

Our experience is your guarantee of success.

Unternehmensberatung vom Profi

Our tips for optimal mortgage conversion

  • Interest rate forecast:

    Find out how interest rates have developed and how interest rate forecasts are.

  • Check the deadlines:

    What is the fixed interest period for your previous loan contract and when can you conclude a new contract with the favourable loan provider?

  • Get offers & compare conditions exactly:

    The basis of a mortgage conversion is the solicitation of offers and the comparison of conditions e.g. options such as repayment rate changes or unscheduled repayment options.

  • Consider Forward Loans:

    If mortgage conversion is due in 3 months or later and you think interest rates will go up, consider taking out a forward loan.

  • Repay partial debts:

    Check whether you can repay part of the remaining debt and reduce the new loan amount.

  • Avoid prepayment penalty:

    The prepayment penalty does not apply if the fixed interest rate period is 10 years or more or the loan is agreed with a variable interest rate. In any case, you should contact your previous lender in good time to find out whether there are solutions to avoid prepayment penalty.

  • Invest interest savings in repayment:

    If you convert the interest savings into higher repayments, you will pay back your loan faster and save a lot of money and interest costs.

Free consultation request/ Financial Data ( Daten zur Finanzierung)

An excerpt from satisfied customers