That sounds tidy. The part people often miss is what happens when the fixed-rate years end and a big chunk of the loan is still there. That's where this guide spends most of its time.
The short version
- Your monthly payment stays the same. Over time, less of it goes to interest and more goes to repayment.
- The fixed-rate period (Zinsbindung) is often shorter than the time it takes to repay the loan. Whatever is left, the remaining debt (Restschuld), has to be refinanced.
- After 10 years you can end a fixed-rate loan with six months' notice, whatever the contract says. 1
- When you compare offers, look at the effective annual rate (Effektivzins), the fixed period, the remaining debt and whether you can make extra repayments. 2
One payment, two jobs
The bank lends you money for the home and you pay it back in equal monthly instalments. Each instalment does two jobs: it pays that month's interest and it repays a small part of the loan. As the loan shrinks, the interest part shrinks too, so the repayment part grows. Same payment, different mix.
Let's do the maths on €280,000
Here's a hypothetical buyer. They borrow €280,000 at an assumed 3.5%, fixed for 10 years, with an initial repayment of 2% a year. The monthly payment is €1,283.33.
Interest (a cost)Repayment (builds equity)
| After | Interest paid that year | Repaid that year | Remaining debt |
|---|---|---|---|
| Year 1 | €9,709 | €5,691 | €274,309 |
| Year 10 | €7,606 | €7,794 | €213,065 |
| Year 20 | €4,345 | €11,055 | €118,129 |
So after ten years of paying, about €213,000 is still owed. If the new rate is 3.5%, the first month's interest on that amount is about €621. At 5.5% it would be about €977. That gap is the interest-rate risk you take on when the fixed period ends. At an unchanged 3.5%, this loan would be paid off after about 29 years. These are calculations with assumed rates, not offers.
Want the nerdy details?The rules, the exact numbers and the edge cases. Open it whenever you're curious.- The German words on your loan offer
- The 10-year exit the law gives you
The German words on your loan offer
| German term | What it means |
|---|---|
| Darlehensbetrag | The amount you borrow |
| Sollzins | The agreed interest rate |
| Effektivzins | The effective annual rate including certain costs. Use it to compare offers. 2 |
| Anfängliche Tilgung | The initial repayment rate per year |
| Zinsbindung | How long the interest rate is fixed |
| Restschuld | What you still owe at the end of the fixed period |
| Sondertilgung | Extra repayments, only as far as the contract allows |
| Anschlussfinanzierung | The new loan or rate after the fixed period |
| Eigenkapital | The money you bring yourself |
The 10-year exit the law gives you
A fixed-rate loan can be terminated ten years after you received the full loan amount, with six months' notice. 1 This matters if you fix the rate for longer than 10 years. If rates fall, you can refinance after year 10 without paying the bank compensation for leaving early. Before that, ending the loan early usually costs a fee.
Before you sign anything
- Equity and purchase costs. Transfer tax, notary and land register are usually paid from your own money. In North Rhine-Westphalia the transfer tax alone is 6.5% of the price. See Renting vs buying.
- Monthly budget. Plan for maintenance, insurance and owner costs on top of the loan.
- Fixed period and remaining debt. Ask the bank for the remaining debt at the end of the fixed period, in euros.
- Flexibility. Can you make extra repayments or change the repayment rate?
- Stress test. Would you still manage if the rate after the fixed period were two points higher?
Three easy ways to get this wrong
Picking the lowest monthly payment. A low repayment rate keeps the payment small today. It also leaves a high remaining debt and more interest overall.
Comparing only the headline rate. The nominal rate leaves out some costs. Compare the effective annual rate.
Forgetting the end of the fixed period. It feels far away when you sign. Start planning the refinancing years ahead.
Questions we hear about German mortgages
Can I get a mortgage as a foreigner?
Banks decide case by case. Your residence status, your income in Germany and how long you've lived here often matter.
Should I fix the rate for 10 or 15 years?
Longer fixed periods give you more certainty and usually cost more. The 10-year termination right gives you some flexibility on long fixed periods. 1
Where this leaves you
During the fixed period, a German mortgage is very predictable. After it, less so. Know your remaining debt, compare effective rates and keep a buffer in case rates are higher when it's time to refinance.
Check yourself
Your fixed-rate period ends after 10 years. What happens?
Video lesson · In the makingHow a German mortgage works
Official sources
- § 489 BGB: borrower’s termination right after ten years
- Verbraucherzentrale: frequent questions about buying a home and home loans
- Verbraucherzentrale: how much home can you afford
- State law NRW: transfer tax rate 6.5%
Last checked:
We explain how the German rules work in general. This isn't personal financial, tax or legal advice. Investments can lose value.