Sollzinsbindung: How Long Should You Fix Your German Mortgage?

Note: This content is specific to the German banking system.

When you take out a mortgage (Baufinanzierung) in Germany, you don't typically get a "30-year fixed rate" like in the US. Instead, you choose a Sollzinsbindung (Fixed Interest Period) of 5, 10, 15, 20, or even 30 years.

During this period, your rate is guaranteed. But the loan usually isn't fully paid off by the end.

The Risk: Anschlussfinanzierung (Follow-up Financing)

Let's say you choose a 10-year fixation.

• Years 1-10: You pay a nice low rate (e.g., 3.5%).
• Year 11: The fixed period ends. You still owe money (Restschuld). You must refinance this remaining debt at whatever the market interest rate is in 2035.
• Danger: If rates jump to 6% or 7% in 2035, your monthly payment could skyrocket.

Strategy: Short vs Long

10 Years (The Standard)

• Pros: Lower interest rate offered today.
• Cons: Higher risk of rate hikes in the medium term.
• Best for: People who plan to sell the house or pay off the debt quickly.

15 or 20 Years (Safety First)

• Pros: You lock in today's rate for a generation. By Year 20, the remaining debt will be so small that a rate hike won't hurt you.
• Cons: Banks charge a "premium" (0.3% - 0.5%) for longer fixation.

The Secret Weapon: § 489 BGB

German law gives borrowers a massive advantage. Section 489 of the Civil Code states that any borrower can cancel a fixed-rate loan after 10 years with a 6-month notice period, penalty-free.

This means if you sign a 20-year fixed rate:

• If rates rise, you keep your cheap rate for 20 years.
• If rates fall after 11 years, you can cancel and switch to a cheaper loan for free.

Verdict: In a volatile market, fixing for 15+ years is often the smartest move because you have a free "exit option" after Year 10.

👉 Calculate your Remaining Debt after 10 years