🏦 Construction financing, withdrawal and termination
In brief
A loan for a house or flat is a consumer loan (Verbraucherdarlehen). In principle you have a right of withdrawal of 14 days. The period starts only when the bank has given you all mandatory information; the right expires, however, at the latest 12 months and 14 days after the contract is concluded. If mandatory information was provided late, a period of one month applies. If there is no right of withdrawal (exceptional cases), you have at least 7 days to think it over.
When the fixed interest period ends, you can terminate, with one month's notice. You can also terminate after ten years, with six months' notice.
With a fixed borrowing rate, you may repay a property loan early only if you have a legitimate interest (for example sale of the house). The bank can then demand reasonable compensation. The caps of 1% and 0.5% apply only to general consumer loans, not to construction financing.
Step by step
- Compare offersCompare interest rate, fixed interest period, repayment and special repayments.
- Check the contract calmlyPay attention to the rules on repayment and termination.
- Mind the withdrawalIf you want to withdraw, do so in text form and on time.
- Plan for the end of the fixed interest periodTerminate or extend early enough. Ask the bank about the deadlines.
Deadlines
- For loans, the withdrawal period starts only after complete instruction (§ 356b BGB). The right expires at the latest 12 months and 14 days after the contract is concluded; there is no unlimited withdrawal.
- Do not terminate under paragraph 3 without paying: the termination becomes invalid if the repayment amount is not paid within two weeks after it takes effect.
- Early repayment with a fixed borrowing rate is possible for property loans only with a legitimate interest, for example on a sale (§ 500 Abs. 2 Satz 2 BGB).
- Early repayment compensation does not apply if the contract lacks the necessary information (§ 502 Abs. 2).
- Construction financing is financial advice; get independent advice.
In depth · legal basis, figures and practice – for advisers and professionals
Withdrawal
§ 495 Abs. 1 BGB: for consumer loan contracts, the borrower has a right of withdrawal under § 355. § 355 Abs. 2: the withdrawal period is 14 days and begins when the contract is concluded, unless otherwise provided. For loan contracts, under § 356b it begins only after receipt of the mandatory information. Under § 356b Abs. 2 the right of withdrawal expires at the latest 12 months and 14 days after the contract is concluded; if mandatory information is provided late, the period is one month. Exceptions (among others loans recorded by a notary where the notary confirms certain points, refinancing under conditions) are in § 495 Abs. 2 BGB. Only in these cases (no right of withdrawal) does § 495 Abs. 3 provide a time to think it over of at least 7 days.
Termination by the borrower
§ 489 Abs. 1 BGB, for a fixed borrowing rate: termination with one month's notice at the earliest for the end of the day on which the fixed borrowing rate ends; or after ten years from full receipt, with six months' notice. Paragraph 2: for a variable interest rate, at any time with three months' notice. Paragraph 3: the termination becomes invalid if repayment is not made within two weeks after it takes effect.
Early repayment
§ 500 Abs. 2 Satz 2 BGB: with a fixed borrowing rate, early repayment of a property loan is possible only if the borrower has a legitimate interest, for example on sale of the property.
Early repayment compensation (Vorfälligkeitsentschädigung)
§ 502 BGB: the lender can demand reasonable compensation for the damage directly connected with the early repayment if the borrower owes a fixed borrowing rate. For property loans (construction financing) only this reasonableness under § 502 Abs. 1 applies; according to the case law of the BGH the damage is calculated with the active-passive method. The caps of § 502 Abs. 3 (at most 1 percent of the amount repaid early, 0.5 percent if the remaining term is one year or less, or at most the interest until the end) apply only to general consumer loans, not to construction financing. No compensation if repayment is made from an insurance required by the contract or if the contract lacks information on the term, the right of termination or the calculation.
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