Renewing or refinancing your mortgage: what to keep in mind
Is your mortgage coming to an end? If so, now is a good time to consider whether you want to renew or refinance it. Comparis explains the ins and outs of refinancing your mortgage.
03.10.2025
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1. What does refinancing a mortgage entail?
Refinancing a mortgage means changing the type of mortgage you have, or changing lender for an existing mortgage.
Refinance a mortgage and benefit from low interest rates
It can be worth switching to a different lender in order to benefit from low interest rates. The mortgage rates on offer can vary depending on the term and the provider. Even small differences in interest rates can make a big financial difference in the long term with a mortgage. It's therefore worth comparing the offerings available.
2. When can I change an existing mortgage?
You can terminate your mortgage effective at the end of the contract term. You can also terminate a mortgage early. Ideally, you should start planning refinancing up to 18 months in advance. This gives you enough time to find the right follow-up solution.
There are different options for refinancing a mortgage, depending on the remaining term of the contract. However, there may be costs involved.
Is your mortgage term coming to an end in the next six months? Check the notice period in your loan agreement. As a rule, it’s between three and six months, depending on the provider. If you observe this period, you can terminate your mortgage quite easily. You won’t incur any additional costs.
In this case, you can already take out a new mortgage, even with a different lender. You don’t need to terminate your current mortgage early.
However, this will sometimes incur what is known as a penalty or forward fee. This is why the term “forward mortgage” is also used. The fee depends on how early the mortgage agreement is concluded and how long the repayment term is. The costs vary considerably depending on the lender. However, many financial institutions do not charge a fee for taking out a mortgage agreement up to around 12 months early.
Good to know
Taking out a new mortgage early makes sense, especially if interest rates are expected to rise. You can find our current mortgage rate forecast here.
If your existing mortgage still has more than one year left on it, you basically have two options:
Early termination: You terminate the mortgage before the end of the contract term. In this case, you will usually have to pay an early repayment charge. However, it can be worthwhile if the savings from cheaper follow-up financing are higher than these costs.
Early repayment: Many banks allow you to extend or switch your mortgage up to 24 months before the end of the term. However, from around 12 months, most lenders charge a forward fee for locking in the interest rate.
Not sure whether it’s worth refinancing your mortgage early? Our mortgage partner HypoPlus can help you find the right financing solution.
If your mortgage is made up of multiple tranches, you need to check the term of each tranche before you refinance. Read more about what to do in this case in the article on splitting your mortgage.
Good to know: most lenders will not take on individual tranches.
Early repayment charge
If you repay your mortgage before the end of the agreed term, you will usually have to pay an early repayment charge. In most cases, you will have to specifically ask for the exact amount to be calculated for you.
There are basically two ways this charge is calculated: the early repayment charge may be based on the remaining term of the original contract, or on the difference in interest.
Exception: if you are selling your property and the buyer is taking over your existing mortgage, the early repayment charge will be waived.
3. Refinancing, renewing or paying off a mortgage?
When a mortgage comes to an end, you usually have the following options:
Renew your mortgage with your current lender
At the end of the term, you can renew the mortgage directly with the current lender. You may negotiate new conditions, such as the term, interest rate or mortgage model. Taking out a mortgage with the same lender is relatively straightforward. However, it rarely offers the best conditions.
Refinance your mortgage with a new lender
Instead of renewing your mortgage, you can refinance it in full at the end of the term with a new lender. This option requires punctual termination and a new credit check.
By refinancing your mortgage, you have the option of finding a lender with better conditions and lower interest rates. This allows you to save money.
Comparis tip
Request at least two or three quotes from different lenders to benefit from the best possible conditions. HypoPlus compares over 30 lenders and finds the best deal for you.
Amortizing your mortgage
In mortgage contexts, “amortization” means gradually reducing your debt through repayments and lowering your interest burden. Although this offers financial stability, it may also lead to a higher tax burden and capital commitment.
4. Refinancing a mortgage: pros and cons
Pro: better conditions and lower interest rates
By refinancing your mortgage, you have the option of switching to a lender with better conditions and lower interest rates. If you negotiate with a range of lenders, or have someone negotiate for you, you can generally secure attractive mortgage rates for the long term.Con: more paperwork
Switching to a different lender means you have to go through the full credit check process. You have to submit all property-related documentation as well as information on your income and assets.
5. How can I refinance my mortgage?
Follow these steps when refinancing your mortgage:
Ensure your new mortgage strategy reflects your current and future needs. Are you approaching retirement? If so, you should take into account any changes in your future income.
Tip: also take into account potential renovation costs. Consider increasing the mortgage if necessary.
If you are terminating your mortgage early, find out about the exit clauses. Also bear in mind any early repayment charges or forward fees.
When taking out a new mortgage, it may be worthwhile changing your main bank at the same time and moving your current and securities accounts, for example. Many providers offer attractive lower interest rates if you do.
Compared with taking out a new mortgage, refinancing is relatively straightforward. In many cases, there’s no need to get a valuation or involve authorities or notaries.
Pay particular attention when comparing providers: mortgage rates can vary considerably.
Once you have found a suitable lender, then you are ready to go ahead and sign the contract. The mortgage agreement is not a purchase and sale contract so it does not need to be certified by a notary.
The new lender may insist on a new entry in the land register, if you split the mortgage into new tranches, for example, or increase the amount you borrow. Changes to the land register (e.g. an increase in the mortgage note) normally incur a fee.
You should only terminate your existing mortgage contract once you have taken out a new mortgage. This ensures that the refinancing process goes smoothly and that there is no financing gap.
The old mortgage will only be properly terminated once the new contract has been confirmed. Usually, the new lender will handle the process directly with the previous lender.
6. Refinance your mortgage when selling your property
When selling your property, you generally have three options
You can carry the mortgage over to a new property.
You can sell the mortgage along with the old property. This means that the buyer will take over your existing mortgage.
You can refinance the mortgage early.
Refinancing the mortgage when you sell is usually the most expensive option because of the early repayment charge.
However, you are dependent on the consent of the lender if you want to transfer your mortgage to a new property or “sell” it to the buyer as a package with your old property. It is well worth looking into solutions at an early stage.
7. Frequently asked questions about refinancing a mortgage
Yes, you can terminate a mortgage early. However, most lenders will apply an early repayment charge to compensate for lost interest. You can find more information about terminating a mortgage early in this article.
The costs depend on whether you refinance your mortgage early or not until the end of the contract.
If you refinance your mortgage at the end of the contract, there are usually no or only low processing fees.
If you refinance your mortgage early, you will usually have to pay early repayment charges. This can be very expensive, especially if you have a high mortgage debt. You can find tips on reducing costs in the event of early refinancing in our article.
You can transfer your mortgage to a new property, provided that:
the bank agrees
the new property is at least equivalent in value
you can afford to do so according to objective criteria
Ideally, the date of sale and purchase should occur close together. The lender usually charges a one-off fee for changing the contract.
Get in touch with your lender at an early stage and clarify the details.
This article was first published on 16.11.2020
