When the fixed rate ends

The remaining debt when the fixed rate ends

With an annuity loan you pay the same amount every month. At first it is mostly interest; with every payment the principal share grows. The remaining debt at the end of the fixed rate can therefore be calculated exactly:

Example: €300,000 at 1.5 % with 2 % initial repayment means a payment of €875 a month. After ten years, about €64,700 is repaid and €235,300 is outstanding. That is exactly the sum to be refinanced. The remaining debt is also on the repayment schedule and the loan’s annual statement.

What a new rate does

For the follow-up financing there are two levers, the payment and the repayment rate. Both depend on the new rate:

• Keep the payment. If the rate rises, more of the same payment goes to interest and less to principal. The term gets longer. In the example, €875 at 3.8 % is so barely above the interest that repaying the remaining debt would take about 50 years.
• Keep the repayment rate. Continuing with the same 2 % repayment means about €1,137 a month at 3.8 %, €262 more than before.

So with €235,300 of remaining debt, every percentage point more costs about €196 a month, or €2,350 a year.

The options for follow-up financing

• Renewal (Prolongation): your current bank extends the loan on new terms. It usually sends an offer a few months before the end. Convenient, no change in the land registry, but not always the cheapest offer.
• Switching banks (Umschuldung): another bank takes over the remaining debt. The land charge is assigned to it, which causes notary and registry costs. Worth it when the rate difference clearly exceeds these costs.
• Forward loan: you lock in a rate today for follow-up financing in the future, usually up to five years ahead. You pay a premium that grows with the lead time. It protects against rising rates, but also binds you if they fall.
• Partial repayment: at the end of the fixed rate you can repay all or part without an early repayment charge, for example from savings. What is repaid does not need refinancing.

The timeline

A typical sequence, counted back from the end of the fixed rate:

1. Up to five years before: forward loans are possible. Of interest above all where a rate rise would seriously strain cash flow or the budget.
2. One to three years before: clarify the remaining debt, compare offers from several banks and brokers.
3. A few months before: your bank’s renewal offer arrives and can be set against the comparison.
4. On the date: the new contract starts, and a partial repayment flows if planned.

The 10-year termination right

For long fixed periods of 15 or 20 years there is a legal way out in Germany: under § 489 of the Civil Code (BGB) you can terminate a fixed-rate loan ten years after it was fully paid out, with six months’ notice and without an early repayment charge. That is interesting when rates have fallen markedly since signing; the remaining debt is then refinanced like a regular follow-up financing.

For rental flats

With a rental flat, the new rate feeds straight into the cash flow after debt service. One percentage point more on €180,000 of remaining debt costs about €150 a month. Part of it comes back through tax, because interest on a rental is deductible: at a 42 % marginal rate, a little over 40 % of the extra interest. Principal, by contrast, is not deductible.

Several loans at once

If you have financed several flats, you often have several fixed periods with different end dates, remaining debts and rates. The danger lies less in a single date than in several falling into the same high-rate phase. A timeline of all loans with the remaining debt expected for each shows early on when how much needs refinancing.

That is exactly the timeline Wertavo shows: every loan, the end of its fixed rate, the remaining debt on that date and what a new rate means for the property’s cash flow.