Cancellation of a loan (mortgage)

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We have got ourselves into a situation where we need to cancel a mortgage, and are looking for some advice.

 

We arranged finance for a mortgage to buy a gartengrundstuck ~ 50,000 euro. Due to unforeseen circumstances, we pulled out of the purchase before the sale was finalised (but after signing the contracts with the notaire).

 

We were quite surprised to find out that even though the loan was never paid out, the bank is requesting a lot of money to cancel it (more than we would have paid in interest). Unfortunately for us, the bank's lien on the property went through, despite the cancellation of the sale, and they are demanding this payment to have the lien removed. 

 

What are our rights in this situation? Do we simply have to pay up, or is there a way to negotiate? We were obviously somewhat naive to think that this loan agreement only came into force upon payout...

 

Thanks in advance.

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They are probably charging you a Vorfälligkeitsentschädigung. They have to explain to you how it´s calculated (if you ask for it to be explained). Basically it covers the profit they would have made over the duration of the loan agreement if you had stuck to the contract.

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What does your contract say about early termination/ cancellation of mortgage?

IANAL- , so you need legal advice. Do you have legal insurance? (Please say yes!)

The loan and interest rate were set for a timed period, so unless there is some clause/ legal obligation on their part for you to cancel-??

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23 minutes ago, RedMidge said:

The loan and interest rate were set for a timed period, so unless there is some clause/ legal obligation on their part for you to cancel-??

 

yeah but now the bank is not going to let them pay off the loan under the original time period as there is effectively no collateral for the loan - in this sense the OP "failed" to hold up their end of the contract by backing out of the purchase at the last minute (I don't even know how you do that after the notar's session is closed but apparently you can?)  You can't hold a loan for property you didn't actually buy.

 

I'm guessing OP is fairly screwed but agree they should speak to a real lawyer asap.  

 

 

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