Forward loan rate, costs and premium: when locking in follow-up financing rates is worth it – comparison and calculator

The mark-up is usually between 0.01 and 0.03 % per month in advance of the current interest rate. With a 36-month lead time and 0.02 % per month, this amounts to an additional 0.72 percentage points, according to the calculations. The exact amount depends on the individual bank and market conditions.

With a forward loan, the interest rate for the subsequent financing is fixed today – up to 66 months before the end of the fixed-rate period – with a mark-up on the current interest rate. The exact amount of this mark-up only becomes binding once a specific offer is made. The current construction loan interest rates can be found on the ‘Current Construction Loan Interest Rates’ page.

The premium is the price the bank charges for committing itself years in advance; the standard rate is between 0.01 and 0.03 % per month in advance. It is worthwhile if interest rates are expected to rise and if the certainty of being able to plan ahead is worth more than the premium. If interest rates are stable or falling, you pay it without receiving anything in return.

A forward loan locks in the interest rate for your follow-up financing in 1 to 66 months’ time. You pay an interest premium, but in return you gain planning certainty — regardless of how the market performs up to the time of disbursement.

Between 0.01 and 0.03 % per month in advance — the longer the lead time, the higher the surcharge. With a lead time of 36 months and a surcharge of 0.02 % per month, this works out at around 0.72 percentage points on top of today’s interest rate.

The standard period is between 1 and 66 months before the end of the current fixed-rate period, depending on the bank. The closer to the end of the fixed-rate period, the lower the surcharge.

No, a forward loan is binding on both parties — unlike a non-binding interest rate quotation. Anyone who opts for a forward loan must take it up at the agreed time; otherwise, they may face compensation payments for failure to take it up.

The special right of termination under Section 489 of the German Civil Code (BGB) applies to the existing, current fixed-interest period — after a term of 10 years, you may terminate the agreement regardless of the originally agreed fixed-interest period. The forward loan itself takes effect as soon as the old fixed-interest period ends or is terminated.

You cannot identify favourable forward loans by the interest rate alone, but rather by the surcharge per month of the lead-in period — this varies considerably between banks and is rarely stated openly. It is even more worthwhile to compare options here than when taking out an initial mortgage, because the surcharge affects the entire new fixed-rate period.

With a forward loan, you fix the interest rate for your subsequent mortgage 1 to 66 months before the end of your current fixed-rate period, in return for a premium of usually 0.01 to 0.03 % per month in advance. It is worth doing this if you expect interest rates to rise and value planning certainty more highly than the premium; if you expect interest rates to remain stable or fall, the standard follow-up financing comparison carried out shortly before the fixed-rate period expires is usually more favourable.

As an independent broker, we compare over 650 banks, as the surcharge per month’s notice period varies considerably between institutions and is rarely disclosed openly. It is possible to take out a new mortgage between 1 and 66 months before the end of the current fixed-rate period; the closer to the end of the fixed-rate period, the lower the surcharge.

A forward loan is one way of locking in the interest rate in advance; the other is traditional refinancing — switching to a new bank rather than renewing the loan with your existing bank. Even a difference of just 0.3–0.5 % in the interest rate can often save you €10,000 or more over the remaining term, as your current bank rarely offers the best terms.

When switching banks, notary and land registry fees (Grundbuchkosten) are incurred for the transfer of the mortgage (approx. 0.15–0.25 % of the loan amount, often covered by the new bank); there is no prepayment penalty if the fixed-rate period expires normally. An overview of all three options — forward loans, refinancing and refinancing despite exceptional circumstances — can be found on the page Refinancing & Refinancing.