If you want to sell a condominium despite a long loan term, a sale is possible. There are several reasons to sell a condominium even if the loan agreement has not yet been paid off: a move, a divorce or even a death. However, if you intend to sell a condominium even though it has not yet been paid off, there are a few circumstances to consider that affect the loan. Above all, these are the conditions agreed in the loan agreement, including the notice period and any early repayment penalty.
The terms of the real estate loan in the event of early withdrawal from the contract
If you sell the condominium with a real estate loan still outstanding, you have the right to terminate the loan agreement.
Only extraordinary termination after ten years is possible without an early repayment penalty. This is what the legislator has stipulated.
The notice periods for the real estate loan in the event of the early sale of the condominium
In principle, early termination of the loan is possible at any time. The only difference is the cost.
If there is a fixed interest rate beyond ten years, you have the right to terminate the loan agreement without compensation as soon as ten years have expired. The notice period is then six months. This is regulated by the statutory Special Termination Act.
If you wish to withdraw from the contract within the fixed-interest period before the contract has been in place for ten years, the bank will demand an early repayment penalty.
If you give extraordinary notice of termination, you have two weeks at the end to pay the outstanding loan amount.
The early repayment penalty for early withdrawal from a real estate loan
The bank charges a prepayment penalty for the fact that it loses valuable interest due to the premature termination of the real estate loan. The prepayment penalty is what can make the sale of the condominium expensive if the property loan has not yet been paid off.
The bank calculates how high the early repayment penalty will be. The amount of the loan, the duration of the term and the interest rate are included in the calculation of the lost interest. However, it happens time and again that the early repayment penalty is not appropriate. Therefore, an objective and critical assessment is definitely worthwhile – if required, we will be happy to put you in touch with a professional auditor.
When is the early repayment penalty due?
The early repayment penalty is due as soon as you sell a condominium for which the loan has not yet been paid off and the loan has not yet run for ten years. During this time, you are still in the fixed interest period when repaying the loan.
Can you avoid the early repayment penalty?
If you would like to purchase a new property, there is the option of not terminating the loan but exchanging the property and letting the contract run with the bank’s consent. In this case, you would not have to pay a prepayment penalty.
Debt restructuring is another way of selling a condominium even though the loan has not yet been paid off. In this case, it is agreed with the bank that the new buyer will take over the seller’s loan. This requires the agreement of the bank and the buyer. The buyer’s purchasing power must be correspondingly high.
It is also important to know that the early repayment penalty does not apply if the cancellation policy in the loan agreement is incorrect. It is therefore worth checking. It is important to check whether all formatting rules have been adhered to and whether the revocation instruction is comprehensible and complete in terms of content.
Sometimes it is also worth waiting some time before selling the condominium before the loan expires, namely when your loan agreement has been running for almost ten years. After ten years, there is usually no prepayment penalty because the fixed interest period has come to an end.
Conclusion: Sale of a condominium that has not yet been paid off
In principle, it is possible to terminate a property loan without notice at any time. Make sure you are well informed so that the exit does not become too expensive due to the payment of an early repayment penalty. Our team of experts will be happy to provide you with professional advice to help you sell your condominium successfully.
