Mortgage Repayment Calculator Germany

Unlike in many other countries, where the repayment period is fixed, Germany often uses a method called the repayment rate. This means you determine the annual percentage at which your loan is repaid.

Repayment rate: The repayment rate is the annual percentage of your loan that you pay back. For example, a repayment rate of 1 % on a loan of 100.000 € means you repay 1.000 € annually.

If you choose a repayment rate of 3 %, you would repay 3.000 € in the first year. In the second year, the repayment portion slightly increases as interest payments decrease once part of the loan is paid off. A 3 % repayment rate would result in paying off your financing in about 30 years.

One of the most common mistakes first-time buyers make is fixing their interest rate for too short or too long.

A shorter fixed interest period is often associated with a lower initial interest rate. Even a difference of 10 basis points, or 0,1 %, can lead to annual savings of 200 € to 300 € on a mortgage of 200.000 €. However, a shorter fixed interest period means that a significant remaining loan balance may be left at the end of the term. If interest rates double during refinancing, this could lead to additional costs of 2.000 € to 4.000 € per year, which can cause financial challenges.

On the other hand, choosing a fixed interest period that’s too long can result in issues such as inflexibility, high costs if you need to move early, or hefty cancellation fees. A longer fixed interest period usually comes with higher interest rates.

Annuity Loans in Germany
Most mortgages in Germany are annuity loans, where the monthly payment remains the same throughout the fixed interest period. This means that you pay a fixed amount each month, including interest and principal repayments.

Calculation of the Monthly Payment
The monthly payment comprises the annual interest and principal repayments, broken down into monthly installments. The calculation is based on the loan amount, interest, and repayment rate.

Changes to the Monthly Payment
The monthly payment stays constant during the fixed interest period and only changes once the fixed interest period ends, when you refinance the remaining balance. During refinancing, you can set a new repayment rate, but the bank will determine the new interest rate, which may differ from your previous rate.

Refinancing is required once the fixed interest period for your mortgage ends. In Germany, you have three main options:

• Forward loan: This option is suitable if your fixed interest period ends in six to 66 months. A forward loan allows you to secure the interest rate well in advance, offering extra planning security, although it can be more expensive.

• Simple refinancing with a new lender: You can switch to a new provider if your fixed interest period ends within the next six months or if you’ve been repaying the loan for more than ten years. This gives you the opportunity to get better terms.

• Prolongation with your current lender: If you prefer to continue working with your current lender, you can extend your existing mortgage, known as a prolongation.

If you’ve been repaying your loan for more than ten years, you have the right to refinance at any time. Under German law (§ 489 BGB), you can terminate your loan contract and transfer your mortgage to another lender, potentially at much better terms.

When the fixed interest period for your mortgage ends, there’s a risk that interest rates will rise. This so-called interest rate risk can lead to higher monthly payments. To minimize this risk, there are several strategies you can consider:

Increase repayments: One way to reduce interest rate risk is to increase your mortgage repayments regularly. With our Mortgage Repayment Calculator for Germany, you can calculate how higher repayments shorten the loan term and reduce your outstanding balance, helping to lower future interest burdens.

Building savings contracts or alternative investments: A building savings contract (Bausparvertrag) can also be a solution to protect against rising interest rates. Alternatively, investing in high-yield assets may help cover future loan payments or allow you to repay your mortgage faster.

Improve risk assessment: Remember that your relative risk typically halves every 10–12 years as you continue to repay the loan; ideally, your income increases over time.

Use the Hypofriend Mortgage Repayment Calculator for Germany to simulate the effects of different repayment rates and develop a clear repayment strategy to better protect yourself against future interest rate fluctuations.

Before finalizing your mortgage, it’s important to know that the typical repayment period in Germany is around 30 years. Deciding on a shorter or longer repayment term is crucial, as it significantly impacts your monthly payments and interest costs. You should also consider your income growth and job security over this period.

Should you choose high or low repayments?

The decision on your repayment rate depends on your financial situation:

High repayments: A higher repayment rate means paying off the loan faster and reducing interest costs over the loan term. This is particularly beneficial if you have substantial financial security and want to reduce your monthly burden in the long run.

Low repayments: Interestingly, interest rates in Germany don’t increase much if you choose a lower repayment rate. If your current income is a limiting factor but you expect future income growth, a lower repayment rate might be a good choice to reduce your monthly payments.

The fixed interest period determines how long your interest rate remains fixed. Once the fixed interest period ends, there will be a remaining balance that needs to be covered through refinancing. A longer fixed interest period offers more security but may result in higher interest rates.