German mortgage fundamentals

Can I use extra repayments to repay my mortgage quicker?

Yes, in Germany, you can make extra payments called "Sondertilgung" of 5% to 10% of the initial loan amount to pay off your mortgage faster. Most banks allow you to make this payment once per year without paying a penalty. If this is important for you, we can find products that allow for higher payments without penalties.

If you expect interest rates to rise, using extra repayments can decrease your loan balance at the end of your fixed interest period. For example, if after five years you see interest rates are increasing, and you are worried about your refinancing risk, you can use extra repayments to reduce your remaining loan balance and ultimately the refinancing cost.

But beware: despite their popularity, unscheduled repayments aren't always the best option for growing your wealth. We analyzed why in the article "Sondertilgung: A Popular but Overrated Option".

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