Prepayment Penalty Calculator (Germany): Estimate Your Early Repayment Fee

The prepayment penalty, often shortened to VFE, is the fee a German bank charges for the interest income it loses when you repay a loan during the running fixed-rate period outside the agreed schedule. Common triggers are selling the property, a divorce, switching financing provider (refinancing), an inheritance or a move.

It helps to separate the related terms. Prepayment interest (Vorfälligkeitszinsen) means the same claim, just an older wording. A non-acceptance fee (Nichtabnahmeentschädigung), by contrast, applies if you never draw down a committed loan in the first place. In every case it is about the loss the bank suffers from your departure from the contract.

The legal basis in two sentences: for mortgage-secured real estate loans the bank may demand a reasonable penalty (§ 490 Abs. 2 BGB, supported by § 500 Abs. 2 BGB). The amount follows the case law of the Federal Court of Justice on the asset-liability method. Note that this calculator gives an estimate. The bank works out the exact figure, and it must do so for free on request.

A prepayment penalty becomes due when you repay a loan with a fixed contract rate early during the fixed-rate period, for example on a sale, a refinancing or when the heirs repay the loan. There are, however, several situations in which the bank may not charge anything.

The most important case is the special termination right under § 489 Abs. 1 Nr. 2 BGB. Ten years after full disbursement you can terminate any loan with six months' notice free of charge, regardless of the agreed fixed-rate period. In practice you are free after about ten and a half years. Variable-rate loans can even be terminated at any time with three months' notice (§ 489 Abs. 2 BGB).

No penalty applies, either, when the contract has faulty, missing or intransparent mandatory disclosures about the term, the termination right or the penalty calculation (§ 502 Abs. 2 Nr. 2 BGB). In 2025 the Federal Court of Justice struck down a common clause because the asset-liability difference calculation was not outlined understandably (BGH XI ZR 22/24 of 20 May 2025). In such cases a reclaim is possible. Repayment funded by a contractually required residual-debt insurance is also exempt (§ 502 Abs. 2 Nr. 1 BGB).

A separate case is a reinvestment rate above the contract rate. If the current Pfandbrief yield is at or above your contract rate, the bank has no interest loss, and the penalty falls to zero. In 2024 the Federal Court of Justice confirmed that the method also applies in a negative-rate environment (BGH XI ZR 159/23 of 12 March 2024).

The basic idea is simple: the bank puts itself in the position it would have been in had it kept receiving your money at the agreed contract rate until the end of the fixed-rate period. Under the asset-liability method it forms the present value of all the lost cash flows from your loan and discounts them with the matching-maturity mortgage-bond (Pfandbrief) yield, which is the reinvestment rate. From that it subtracts the balance repaid today. The difference is the present-value interest loss.

Two items are deducted from this gross loss: the saved risk costs, because the bank's default risk falls away, and the saved administration costs. The bank must also calculate as if you had used all agreed special-repayment rights in full. That lowers the balance in the projection and therefore the penalty. Processing fees are regularly not recognised on top of the penalty, so our calculator shows any such fee separately and does not fold it into the penalty.

In simple terms, the calculator shows the bridge: gross interest loss, minus saved risk costs, minus saved administration costs, equals the prepayment penalty. The method distinguishes the margin loss, that is the bank's lost margin, from the rate-deterioration loss, that is the disadvantage from the fallen market rate. Both sit inside the present-value comparison.

Foundational for this method are the rulings of the Federal Court of Justice of 1 July 1997 (XI ZR 267/96 and XI ZR 197/96). It was also clarified that discounting uses actually traded Pfandbrief yields rather than pure index values (BGH XI ZR 285/03 of 30 November 2004).

The cleanest route is to make full use of the 10-year special termination right under § 489 BGB. Count the date precisely from full disbursement: ten years plus the six-month notice. Using agreed special repayments beforehand also lowers the balance and therefore the basis for the penalty.

On a sale there are further options. If the buyer takes over the loan (a change of debtor) and the bank agrees, the early repayment falls away entirely. With a collateral swap, the security moves to a new property while the loan continues unchanged. Both routes require the bank to cooperate.

Also have the bank's calculation checked. It is often faulty because special-repayment rights or a change of instalment were not taken into account. A reclaim is then possible. If the mandatory disclosures about the calculation in the contract are insufficient, the claim can even fall away entirely (§ 502 Abs. 2 Nr. 2 BGB, BGH XI ZR 22/24 of 2025).

A realistic note on the classic right of withdrawal: the formerly open-ended right mainly affected contracts between 11 June 2010 and 20 March 2016 with a faulty notice. For contracts from 21 March 2016, the right of withdrawal expires after about one year and 14 days at the latest. For newer loans this route is therefore usually closed, which is why § 502 Abs. 2 Nr. 2 BGB is the more relevant angle today. None of this is legal advice. When in doubt, seek specialist advice.

The decision logic is manageable: weigh the prepayment penalty plus any switching costs against the interest savings from cheaper follow-up financing. With a large rate advantage and a long remaining term, refinancing can pay off despite the penalty. Whether the new payment is affordable, you check with the home affordability calculator, and whether switching to follow-up financing is cheaper overall, you work out there.

If you want to avoid the penalty entirely, look at the forward loan. It does not repay your current loan early; it locks in today's rate for later. The actual repayment then happens on schedule at the end of the fixed term, so no penalty applies. You work out the balance at that date most accurately with the mortgage repayment calculator.

If you sell in order to repay, keep the knock-on costs in mind. Buying a new property triggers closing costs again. For tax, the penalty on a rented property can reduce the taxable gain as selling costs under § 23 EStG (BFH IX R 42/13). You check that with the speculation tax calculator. Whether holding or selling pays off over the holding period is examined by the rent vs. buy calculator.

You will find the key figures in your loan agreement and the latest annual statement: the current balance, the fixed contract rate, the end of the fixed-rate period and your special-repayment right. If the balance at the planned repayment date is still unclear, work it out with the mortgage repayment calculator.

The current reinvestment rate, that is the matching-maturity Pfandbrief yield, is published by the German Federal Bank in its capital-market statistics. What matters is the yield for the maturity that matches your remaining term. If you are close to the ten years since full disbursement, enter the months since full disbursement in the advanced options. The calculator then models the special termination right precisely.

Remember that the calculator only gives an estimate. The bank must provide a free, binding calculation. Export your result as a PDF and compare it with the bank's figure. That way you quickly spot whether the bank accounted for your special-repayment rights.