Tax
Financing guide
The prepayment penalty when selling property
The loan is still running and the flat is to be sold. What the law allows, what the bank may ask for and how to calculate before the notary appointment.
In Berlin since 1995IVD member for over 20 years4.6 out of 5 on Google, as of 18 July 2026
Free and without obligation
What is your property worth?
Three short questions, then your contact details.
What would you like to have valued?
Roughly how large is the living space?
When would you like to sell?
Where should we send the initial assessment?
Please enter your name, phone number and email address and give your consent.
No disclosure to third parties
Free and without obligation Usually a reply within one working day
4.6 47 Google reviews
Member for over 20 years 
In short. If you sell a financed property, you may terminate the loan early during the fixed-rate period; the sale expressly counts as a legitimate interest for this (Section 490 para. 2 German Civil Code). The bank may then claim compensation for its loss, the prepayment penalty. It does not apply if the fixed-rate period has expired, if more than ten years have passed since payout, or if the loan agreement lacks the required information.
Your right to terminate early
A mortgage loan with a fixed interest rate normally cannot simply be repaid. For consumers the law says so expressly: during the fixed-rate period you may only repay a consumer loan secured on property early if you have a legitimate interest (Section 500 para. 2 sentence 2 German Civil Code).
The sale is such an interest. Section 490 para. 2 German Civil Code names the need to dispose of the mortgaged property otherwise as an example. A further condition is that six months have passed since full payout. Notice is given with the periods of Section 488 para. 3 sentence 2 German Civil Code.
When the bank asks for compensation
If you terminate because of the sale, the bank has to take the loan back earlier than it planned. You must compensate it for the resulting loss (Section 490 para. 2 sentence 3 German Civil Code). For consumer loans the claim is tied to a fixed borrowing rate and must be reasonable (Section 502 para. 1 German Civil Code).
When no compensation is due
- Fixed-rate period expired: without a fixed borrowing rate there is no claim under Section 502 German Civil Code.
- More than ten years since payout: you may then always terminate with six months' notice (Section 489 para. 1 no. 2 German Civil Code), even with a fixed-rate period of 15 or 20 years. If a new interest agreement was made later, its date counts.
- Insufficient information in the contract: if a consumer loan lacks adequate information on the term, the right of termination or the calculation of the penalty, the penalty does not apply (Section 502 para. 2 no. 2 German Civil Code). Whether this applies to you can be checked by a consumer advice centre or a lawyer.
What the amount depends on
There is no fixed cap for mortgage loans. The limit of one percent, or 0.5 percent with less than one year remaining, applies under Section 502 para. 3 German Civil Code only to general consumer loans. For consumer loans secured on property, the bank calculates its loss: what matters is the outstanding balance, the remaining fixed-rate period and the gap between your contract rate and the rate at which the bank can reinvest the money today. The longer the fixed-rate period still runs and the further rates have fallen since the contract was signed, the higher the amount.
Ask for the calculation in writing. It is the basis for your decision, not an estimate over the phone.
What this means for your sale
Get the figure before you set a price. The penalty reduces your proceeds just like notary costs or tax. Then look at two routes that only work with the bank's consent: swapping the collateral to a newly bought property and the buyer taking over the loan.
Sometimes it pays to schedule the notary appointment after the fixed-rate period ends or after the ten years have passed. That only works out if the market does not soften in the meantime. We weigh this up with you on the basis of a current valuation.
Legal notice. This article reflects the situation as of 1 October 2026 and is intended as a first orientation. It does not replace legal or financing advice in the individual case. As estate agents we may not and do not wish to provide legal advice. For binding information, please contact a lawyer or a consumer advice centre.
Sources
- Section 490 German Civil Code, extraordinary right of termination, paragraph 2
- Section 489 German Civil Code, ordinary right of termination after ten years
- Section 488 German Civil Code, notice periods
- Section 500 German Civil Code, early repayment of consumer loans
- Section 502 German Civil Code, prepayment penalty
Read more
Frequently asked questions
Prepayment penalty: frequently asked questions.
Answers as of: 1 October 2026
May I terminate my mortgage loan if I sell?
Yes. If the loan is secured by a land charge and the fixed-rate period is still running, you may terminate early if you have a legitimate interest and six months have passed since the loan was paid out. By law, the sale of the mortgaged property expressly counts as such an interest (Section 490 para. 2 German Civil Code). The bank may then ask for a prepayment penalty.
When is there no prepayment penalty?
If the fixed-rate period has already expired, if more than ten years have passed since full payout and you terminate with six months' notice (Section 489 para. 1 no. 2 German Civil Code), or if, for a consumer loan, the contract's information on term, right of termination or calculation of the penalty is insufficient (Section 502 para. 2 no. 2 German Civil Code).
Does the one percent cap also apply to mortgage loans?
No. The limit of one percent, or 0.5 percent with a short remaining term, applies under Section 502 para. 3 German Civil Code only to general consumer loans, not to consumer loans secured on property. For a mortgage loan, the amount depends on the bank's loss, above all on the interest rate difference and the remaining fixed-rate period.
Can the buyer take over my loan?
Only if the bank agrees; there is no right to it. More common is a swap of collateral: you buy a new property and the bank takes its land charge instead of the old one. This too requires the bank's consent. Ask before the notary appointment so that you can compare offers.
Is selling worth it despite the penalty?
We set market value and costs side by side so that you can choose the right moment.