24. Jun 16

Withdraw from loans in due course and benefit from low interim interest

It is often possible to save several thousand euros by withdrawing from a real estate loan. Having said that, this so-called “ewiges Widerrufsrecht”, or perpetual right of withdrawal, shall cease to exist for legacy contracts on June 21, 2016.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: With the implementation of the EU Directive on Residential Property Loans, what is sometimes referred to as a perpetual right of withdrawal is set to come to an end for legacy contracts on June 21, 2016. Anybody who still wishes to withdraw from a real estate loan agreement concluded between 2002 and 2010 should therefore take action. After the deadline has expired, it will no longer be possible to withdraw.

Due to the fact that banks and savings banks frequently made use of flawed guidance on the right of withdrawal with respect to real estate loans concluded between 2002 and 2010, the withdrawal period never commenced in many of these cases. As a consequence, it is still possible to withdraw from and rescind these agreements even years after they were taken out. In doing so, consumers can restructure their debts under favourable conditions and benefit from the current low level of interest rates. Depending on the loan amount and interest rate conditions, they often stand to save several thousand euros.

Even though it will no longer be possible to withdraw from these legacy contracts after June 21, 2016, withdrawal remains a possibility until that date. For withdrawal from a loan to be successful, it is necessary for the bank in question to have used flawed guidance concerning the right of withdrawal. Ambiguous wording pertaining to the commencement of the withdrawal period, e.g. by using the word “frühestens” (at the earliest), could indicate that the guidance on the right of withdrawal is flawed. Notwithstanding this, it is not easy for a layperson to determine whether the bank has properly informed him about his withdrawal options. In order to assess the guidance he received regarding withdrawal, he can turn to a lawyer who is versed in the field of banking law.

If the criteria are met and the issue of follow-up financing has been clarified, withdrawal should be declared vis-à-vis the bank. Even if the bank does not accept the withdrawal, the legal situation is clear in most cases. Common arguments advanced by the banks such as that the right of withdrawal has been forfeited or exercised in bad faith have since been rejected by various courts. Even the fact that a loan has been prematurely paid off by way of an early repayment penalty does not usually represent an obstacle to withdrawal.

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