Building finance: Loan early, that’s how it works
First, you need to determine the date on which you can cancel the mortgage lending. The decisive factor here is not the date on which you signed the contract with the bank, but the date on which the loan was once fully paid out to the seller. At that time, you must have received a written confirmation from your bank. So check your records. If this information cannot be found, a call to the bank will help.
Checking: Have there been any changes to the contract?
If the content of the contract has been changed in the meantime and signed again, the 10-year period only starts from the date of the change agreement, the original date of full payment no longer counts. This is the case, for example, with a rollover, if you have already extended your original mortgage lending with the same bank after the first fixed interest period.
Determine the earliest possible termination date
We now assume that the contract has not been changed in the meantime and the original date of the full payment counts. Assume that the building loan was paid out in full on January 1, 2010. If you add ten years from the next day (02/01/2010), then the building financing can be terminated as early as possible from 02/01/2020 with a period of six months. If you cancel on January 2nd, 2020, the day you cancel will be July 2nd, 2020. On this day, your building finance will expire.
Write notice of termination
Now that you know which date you can cancel, it is time to send the written cancellation to the bank. To do this, you need the loan number that the bank assigned to your loan. You can find this loan number in your real estate loan contract. It is best to name this loan number directly in the subject line of the contract. Also important: if there are several borrowers, for example you and your spouse, then both of you must also sign the termination. And punctuality is important: If you want to cancel at the earliest possible date, the notice of termination must be received by the bank exactly on January 2nd, 2020. It is best to send the letter by registered mail / return receipt, then you will receive written proof at the end of the timely receipt of the cancellation.
Complete follow-up financing
You have sent the letter and canceled, now the six-month notice period begins. The old bank won’t let you out of your contract one day before July 2nd, 2020, so you have to wait for this time. You can bridge this phase sensibly by taking care of follow-up financing so that you can also repay the amount of the remaining debt due in six months. Otherwise the old bank will charge you the sum and you will be left empty-handed.
Pay off the remaining debt on time
After the notice period expires on July 2nd, 2020, the remaining debt is due at the old bank. It must be paid within two weeks. In our example, this means that the outstanding amount must have been received by the old bank by 07:59 p.m. on July 15, 2020. You have to take this seriously, because the cancellation will become ineffective if the amount is received too late. In this case you would have to give a new notice and wait another 6 months. This can be very annoying, especially if you have already completed new financing that you do not need at all. Provision interest and thus additional costs may be due here.