German Mortgage Glossary

Fixed Interest Period

(Zinsbindungsfrist)

The Fixed Interest Period refers to how long your mortgage's interest rate is fixed for. In Germany, the most frequently used fixed interest period for a mortgage is 10 years. This means that the interest rate does not change for 10 years.  

In general: a longer fixed period will mean greater security and a higher interest rate. A shorter fixed period will mean a lower interest rate, but a higher interest rate risk. However this is not always the case. A complicating factor is that, if you leave before the 10 years are over, you may be subject to pay the bank the lost interest payments as a penalty, the so called "Vorfälligkeitsentschädigung". 

While intermittent maturities are available, in Germany banks offer the best prices for rates that are fixed for 5, 10, 15, 20 and 30 years.

TIP: Rates for 10 year mortgages are relatively attractive in Germany because banks make substantive fixed costs and want to recoup them during the loan period. So shorter fixed interest therefor tend to be relatively expensive if compared to other countries. Longer rates (over 10 year) rates tend to be more expensive then in other countries as customers have the right to cancel their mortgage after 10 years. Banks recoup the potential costs for this by charging more for longer mortgages.

Use the "right mortgage" tool to see what the best fixed rate period is for you. We take all factors into account, like the interest rate, interest rate projections, risk of early departure and penalty etc.