21. Nov 16

Mortgage rates continue to fall – Get-out-of-jail-free card for loans from June 10, 2010 onwards

Mortgage rates continue to fall. In view of this trend, withdrawing from a real estate loan that was taken out from June 10, 2010 onwards could be a financially attractive proposition.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: Real estate loans have never been so affordable. In the case of short-term fixed interest rates, mortgage rates might even fall below one per cent and thus render withdrawing from existing real estate loans concluded since June 10, 2010 a lucrative proposition. Withdrawal can enable consumers to restructure their debts under favorable conditions and benefit from the historically low interest rates without having to pay an early repayment penalty. This is because withdrawal is still possible in the case of real estate loans concluded after this date. It is only with respect to older real estate loans which were taken out between November 2002 and June 10, 2010 that the right of withdrawal lapsed on June 21, 2016.

In order to withdraw from a loan, it is necessary for the bank or savings bank in question to have made use of flawed or inadequate guidance on the right of withdrawal, as this then means that the withdrawal period never commenced. Banks have even continued to use flawed guidance in relation to more recent real estate loans.

The Oberlandesgericht (OLG) München [Higher Regional Court of Munich] delivered a judgment as early as May 2015 in which it held that attempts to withdraw from several loan agreements concluded between the years 2011 and 2012 were effective, ruling that the guidance used in these agreements concerning the right of withdrawal was flawed due to the fact that it did not stand out sufficiently from the rest of the contractual provisions. The OLG concluded that this was not in keeping with the requirement for clarity as stipulated by the legislature. Another contentious point is a passage stating that the withdrawal period begins after the agreement has been concluded but not before the borrower receives all of the obligatory information pursuant to sec. 492 para. 2 of the Bürgerliches Gesetzbuch (BGB) [German Civil Code]. The required obligatory information was not included in its entirety in the guidance on the right of withdrawal, with the result that it remains unclear when the withdrawal period commenced.

Consumers who wish to withdraw from their real estate loans concluded after June 10, 2010 can turn to a lawyer who is versed in the field of banking law. He can examine whether the necessary preconditions are met for loan withdrawal to be successful. Consumers who gave timely notice of withdrawal from an older loan but this was rejected by the bank can also turn to a lawyer who is experienced in the field of banking law to enforce their claims.

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