Secure follow-up financing for your home loan online in good time and save thousands of euros
19/06/2025
10
Minutes
Katrin Straub
Managing Director at nextsure
The end of your fixed-rate period is approaching and you’re concerned about rising instalments? Act now, because a well-planned follow-on financing for your home loan can save you more than €10,000. We’ll show you how to master the process online in good time.
The topic in brief and concise terms
Begin planning your follow-on financing at least 12 to 36 months before the fixed-rate period expires to avoid time pressure.
Always compare your bank’s offer (extension) with refinancing from a new provider, as there is often potential to save thousands of euros here.
Use your statutory special right of termination under Section 489 of the German Civil Code (BGB) to exit an expensive loan after ten years without any additional costs.
Cushioning rising interest rates: Why early action is crucial
Your bank is legally obliged to make you a new offer no later than three months before the end of the fixed-rate period. But anyone who waits that long comes under time pressure and misses the chance of securing the best terms on the market. Experts advise dealing with follow-up financing 12 to 36 months in advance.
A difference of just one percentage point in interest rates can have enormous consequences. With an outstanding balance of €150,000, that means an additional interest burden of €1,500 per year. Over a term of ten years, that adds up to €15,000.
The current development in construction loan interest rates shows that the historically low rates of 2015 to 2021 are over for the time being. Early engagement with the topic protects you from unpleasant surprises and gives you the necessary room for negotiation. This lays the foundation for choosing the right financing strategy.
Strategic decision: forward loan or refinancing?
There are mainly three ways to secure your follow-on financing: prolongation, refinancing and a forward loan. Prolongation, i.e. extending with your current bank, is convenient but rarely the cheapest option. Refinancing or a forward loan often offer significant savings potential.
Your strategic options at a glance:
Forward loan: This allows you to lock in today's interest rates for a disbursement in up to 66 months. This makes sense if you expect interest rates to rise, but it comes with an interest premium of around 0.01 to 0.03 percentage points per month of lead time.
Refinancing: At the end of the fixed-rate period, you switch to a new bank with better terms. An interest advantage of just 0.2 percentage points can make a refinancing despite low costs worthwhile for the land register assignment.
A forward loan is a bet on the interest rate trend and carries an obligation to take it up, even if interest rates unexpectedly fall. So weigh carefully whether you want to commit yourself long term with a forward loan or prefer the flexibility of refinancing later. Knowing your statutory rights can have a decisive influence on this decision.
Your legal right: exercising the special right of termination under Section 489 of the German Civil Code
A powerful tool for any borrower is the special right of termination under Section 489 of the German Civil Code (BGB). Regardless of the agreed fixed-interest period, you can terminate any construction loan after ten years. The notice period for this is six months, and the bank may not charge any early repayment penalty.
The ten-year period begins on the day after the loan has been paid out in full. In the case of follow-on financing or a forward loan, caution is required: here, the date of contract signing already counts as the start of the period. A calendar entry for this date can secure you flexibility worth thousands of euros.
This right enables you, even during a long fixed-interest period, to respond to a lower interest rate level and refinance. This allows you to avoid the often high costs of an early repayment penalty. With this knowledge, you can confidently start the online comparison process.
In five steps to the optimal online follow-on financing
Securing the follow-on financing for your mortgage in good time online is straightforward if you proceed systematically. The digital process offers transparency and saves time. Follow the five-step guide below:
Review your position: Check your current loan agreement. Make a note of the remaining debt, the end of the fixed-rate period and your current interest rate.
Obtain a renewal offer: Request the offer from your existing bank. It serves as an important benchmark, but is rarely the best deal.
Compare the market: Use an online calculator to get an overview of current terms. A cheap mortgage is often available from a new provider.
Prepare documents: Gather all the necessary documents. These usually include your last three payslips, the land registry extract and your current loan agreement.
Finalise and complete offers: Obtain binding offers from two to three favourites and choose the best option.
By comparing in a structured way, you secure a solid basis for negotiation and avoid typical sources of error.
Expert tips: Common pitfalls and how to avoid them
On the way to refinancing, there are a few pitfalls that you can avoid with the right preparation. Many borrowers give away money out of sheer convenience or ignorance. A common mistake is to accept the first offer from the bank without comparing it with others.
Our expert tip: factor in any future unscheduled repayments from the outset. With refinancing, you can often adjust the repayment rate flexibly and become debt-free more quickly. A higher repayment rate, for example four per cent instead of two, significantly shortens the term.
Another pitfall is hidden costs. When refinancing, notary and land registry fees are incurred, but these usually amount to only a few hundred euros. These low costs are quickly offset by the interest savings of often several thousand euros. Also check whether you want to adjust your annuity loan. Proper planning is the final step before a secure conclusion.
Conclusion: Proactive planning as the key to success
Refinancing your home loan is not something that happens automatically, but a strategic decision. Early digital planning, at least twelve months in advance, is crucial. It gives you the necessary lead time to compare offers without pressure.
Make use of your special right to cancel after ten years and do not shy away from the effort involved in refinancing. Switching to a cheaper provider can reduce your monthly instalment or shorten the remaining term by several years. Even an interest rate advantage of 0.5 percentage points can mean savings of more than 10,000 euros.
Act now to actively shape your financial future in your own home. A professional analysis of your situation can help you make full use of all potential opportunities. Have your options reviewed by experts to find a tailored solution for your mortgage financing.
Request your individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific suggestions for improvement.
More useful links
Wikipedia explains the term refinancing in the context of property loans.
The Bundesbank offers statistics on interest rates for housing loans to private households in Germany.
The Bundesbank contains data on interest rates and yields for housing loans to private households and mortgage loans on residential property.
The Bundesbank refers to its MFI interest rate statistics, which include outstanding amounts and new business.
The Bundesbank offers an Excel file with data on mortgage interest rates.
The Federal Statistical Office (Destatis) provides a PDF document with experimental data on mortgage contracts.
The Federal Statistical Office (Destatis) links to a page on construction prices and the house price index.
FAQ
What is the difference between debt restructuring and extension?
With a prolongation, you extend your expiring loan with your existing bank on new terms. Refinancing means switching to a new bank, which pays off your remaining debt with the old bank. Refinancing is often associated with lower interest rates.
Is a forward loan worthwhile?
A forward loan is worthwhile if you are in a period of low interest rates and expect interest rates to rise significantly by the end of your fixed-rate period. You pay an interest premium for this. However, if interest rates fall contrary to expectations, you will pay more than necessary, as you are tied to the contract.
When can I cancel my construction loan after 10 years?
Under Section 489 of the German Civil Code (BGB), you can always terminate a loan agreement with a fixed interest rate ten years after full receipt of the loan amount. The notice period is six months. The bank may then not demand early repayment compensation.
What documents do I need for refinancing?
To compare offers and complete the process, you will usually need your old loan agreement, a current land register extract, your last three payslips, and a statement of the outstanding balance as at the redemption date.
Can I also refinance a follow-on financing even if the remaining debt is low?
Yes, even with a small remaining debt of under EUR 50,000, refinancing can be worthwhile. Alternatively, you can check whether paying it off with equity or taking out a personal loan is more affordable than extending it with your current bank.
What happens to my KfW loan when I refinance?
A KfW loan can be dealt with separately. If it matures at the same time as your main loan, it can be refinanced together with it. Otherwise, you must extend it with KfW or refinance it separately. The special right of termination after ten years also applies to KfW loans.
