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What is a " Vorfaelligkeitsentschädigung" ????

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Hey I need some help/advice! I read on this website (https://www.vorfaelligkeitsentschaedigung.net/)  that in some cases you can get a return of the Vorfälligkeitsentschädigungskosten if the right of withdrawel was not written correctly for example. Can someone eleborate??? My german is not the best. 

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In Germany when you take a credit and you pay it before the time you were supposed to pay it you receive a "penalty" from your bank for lost of gains.  Since you paid in advance they won't get the interest money you promised to pay them, so they want some compensation for that lost.

 

 

It already happened about 10-13 years ago, a mistake made a bunch of mortgage contracts invalid and you could get out of them without having to pay any penalty, just paying the debt.   At the time that was used by plenty of people to renegotiate their mortgages and get slightly better deals.   That site seem to be talking about a new mistake found in contracts from 2010 making it possible to get out of the mortgage without having to pay the penalty.  This is good timing, so thanks. a lot for that info, I will research more about it.

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23 hours ago, Krieg said:

In Germany when you take a credit and you pay it before the time you were supposed to pay it you receive a "penalty" from your bank for lost of gains.  Since you paid in advance they won't get the interest money you promised to pay them, so they want some compensation for that lost.

 

 

It already happened about 10-13 years ago, a mistake made a bunch of mortgage contracts invalid and you could get out of them without having to pay any penalty, just paying the debt.   At the time that was used by plenty of people to renegotiate their mortgages and get slightly better deals.   That site seem to be talking about a new mistake found in contracts from 2010 making it possible to get out of the mortgage without having to pay the penalty.  This is good timing, so thanks. a lot for that info, I will research more about it.

 

 

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Thank you! That sounds way easier to understand! 

 

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So the thing to remember is that when negotiating a new credit,

if you think there may be a chance of paying off early

(whole or part of the loan), it would be prudent to check 

1) how much the penalty would cost

2) what would be the alternative loan rate if early payoff is allowed without penalty ( Vorfälligkeitsentschädigung)

 

Some loans come in a higher APR for features like the chance of early repayment or

up to certain number or value of repayments each year.

 

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Thanks - the explanation is very helpful. I read online that the maximum statutory period of Vorfälligkeitsentschädigung period is 10 years. Post 10 years the payment of penalty is not applicable. Is this correct?

Ist eine Vorfälligkeitsentschädigung bei Verkauf vermeidbar? Generell können Sie, unabhängig von der Laufzeit der Zinsbindung, Ihr Baufinanzierungsdarlehen nach einer Frist von zehn Jahren kündigen - und zwar ohne eine Vorfälligkeitsentschädigung zahlen zu müssen. Die Kündigungsfrist beträgt sechs Monate (§ 489 BGB).
 

  

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Yes, basically every mortgage can be renegotiated after 10 years or paid in full if you want.

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