German Mortgage Glossary

Additional Repayment

(Sondertilgung)

Many banks offer a sondern tilgung or additional repayment of up to 5% of your loan amount per annum in addition to your regular monthly repayments. It makes a lot of sense given that your income is likely to increase over time while your mortgage payment stays the same. Instead of saving through your bank, it is more advantageous to pay off yur mortgage more quickly, as the interest on your bank account will mostly be less than that on your mortgage. In practice few people use this option though. 

I You can also include at extra cost further repayment options in your contract (but normally no more than 10% p.a.). The latter makes sense if you expect a large payout from an insurance or inheritance. But: often there are additional costs for this right.