Follow-Up Mortgage 2026: Prolongation, Refinancing or Forward Loan?

When your fixed-rate period ends, your loan does not end – only the guaranteed interest rate does. What comes next can decide tens of thousands of euros: the convenient prolongation with your existing bank, refinancing with a cheaper one, or a forward loan that locks in today rate for a payout up to five years away. After the ECB rate hike in June 2026 and mortgage rates around four percent, timing matters again. This article works through the options without the sales talk.

What really happens when your fixed period ends

A property loan is almost never paid off within the first fixed-rate period. After the usual ten years there is still a sizeable balance registered against your property – with a classic financing at two percent initial repayment, that is roughly 70 to 75 percent of the original sum after ten years. For that remainder you need a follow-up financing. The loan keeps running; only the rate that was guaranteed until now falls away and has to be renegotiated.

The good news: you are not forced to stay with your current bank. About six months before your fixed period ends, a prolongation offer usually lands in your mailbox – but that is just one of three doors. Anyone who knows the other two and acts early often saves a four- to five-figure amount over the second phase of the loan. Anyone who simply signs the offer almost always overpays.

Where rates stand in summer 2026

As of 17 July 2026, nominal rates for a ten-year fixed period sit roughly between 3.7 and 4.1 percent, depending on your credit standing and loan-to-value. That is far above the dream conditions below one percent from 2020 and 2021. Anyone who financed back then and now enters follow-up financing has to brace for a noticeably higher payment – the days of renewing at 0.9 percent are over.

Part of the reason is monetary policy: on 11 June 2026 the ECB raised its key rates by 0.25 percentage points, rather than cutting them. The deposit rate has stood at 2.25 percent since then, triggered by stubborn inflation of 3.2 percent in the euro area in May. For the second half of 2026, most rate experts expect a sideways movement with a slight upward tendency. A drop back below three percent is seen as unlikely. It is exactly this environment that makes choosing the right follow-up strategy so important.

Option 1: Prolongation with your existing bank

A prolongation is the extension with your current bank. It sends you an offer, you sign, and the loan continues under new terms. The big advantage: it is convenient and free. There is no new land-charge registration, no notary appointment, no large-scale credit re-check. One or two signatures and you are done, with no fresh paperwork at the land registry.

The catch is the rate. Banks know that many customers stay out of convenience and rarely price the prolongation offer at the sharpest level. A markup of 0.2 to 0.4 percentage points over the best market offer is not unusual. On a remaining balance of 200,000 euros over ten years, that quickly adds up to several thousand euros. So never take the offer as fixed, but as a starting point for comparison – and go back into the negotiation with a better third-party quote in hand.

Option 2: Refinancing with a different bank

With refinancing, you move your remaining balance to a new bank that offers better terms. It pays off your old loan and becomes the creditor itself. For this to work, the land charge has to be transferred from the old bank to the new one – this is the land-charge assignment. Unlike a completely new registration, this is the cheaper route, because the existing land charge is merely assigned rather than newly entered in the land register.

The cost for that is modest: notary and land-register fees come to roughly 0.1 to 0.2 percent of the land-charge amount, so on 200,000 euros that is about 200 to 400 euros. Many banks even cover these switching costs fully or partly to win you as a customer. Still, weigh the assignment cost against the interest savings: even a rate advantage of 0.2 percentage points easily earns back those few hundred euros over the term. With the percentage calculator you can see in seconds what percent of the land charge the side costs make up.

Option 3: The forward loan explained

The forward loan is follow-up financing with a lead time. You sign a loan contract today that is only paid out in the future – with most banks up to 60 months, that is five years in advance. Until the payout date nothing happens: you keep paying your old rate, and the new rate is already fixed. If your fixed period does not end until 2028 but you expect rising rates, a forward loan lets you lock in today level now.

The idea behind it is a bet against rising rates: you are buying planning certainty. If mortgage rates do rise by the time your period ends, you have secured today cheaper level. If they fall instead, you committed too early and pay more – because the guaranteed rate works in both directions. A signed forward loan generally has to be drawn down, and backing out can trigger a non-acceptance fee. That is precisely why the direction of the forecast is decisive, and why you should only sign one when you genuinely expect rates to climb.

The forward premium: the decisive calculation

Locking in the rate is not free. For every month between signing and payout, the bank charges a forward premium on top of today rate. As a rough order of magnitude, depending on provider and market, that runs around 0.01 to 0.03 percentage points per lead month. With 24 months of lead time, that means roughly 0.24 to 0.72 percentage points of markup; with 36 months, correspondingly more. The further away the payout, the more expensive the hedge.

That frames the core question clearly: a forward loan only pays off if rates rise more by your end date than the premium costs. Suppose the current ten-year rate is 3.9 percent and you need the follow-up financing in 24 months. With a premium of about 0.5 percentage points, you lock in around 4.4 percent. That only works out if the market rate two years from now is above 4.4 percent. If it stays at 3.9 percent or falls, you would have been better off without the forward.

The statutory termination right after Section 489 BGB

One right many people overlook can turn the whole calculation around: under Section 489 of the German Civil Code (BGB), you may terminate any fixed-rate property loan ten years after full payout – in full or in part, with six months notice and without any prepayment penalty. The ten-year clock starts one day after full disbursement, not on the contract date.

This is especially relevant for anyone who originally chose a long fixed period of 15 or 20 years. Even if your contract is still fixed until 2032, you can get out ten years after payout once market rates have fallen below your contract rate. In an environment like 2026, where many still hold old, expensive contracts from the high-rate phase, this exit window is worth real money. So check your payout date before you think about refinancing – without this termination right, an early payoff would trigger a costly prepayment penalty.

Timing with sideways to slightly rising rates

The current forecast – a sideways movement with a slight upward bias – matters almost more for the strategy choice than the absolute rate. In a clearly falling market, waiting with a short bridge solution would make sense. In a rising market, there is a strong case for locking in early. In the expected sideways scenario the truth lies in between, and the decision depends heavily on your own time horizon.

Rough rules of thumb for summer 2026: if your fixed period ends within the next twelve months, compare prolongation against refinancing consistently now – a forward rarely pays off over such a short span, because the premium eats up the possible rate advantage. If you only have to refinance in 18 to 48 months and fear rising rates, the forward loan gets interesting. Anyone who believes rates will soon fall sharply should instead keep their hands off the forward and stay flexible.

Worked example: when the forward pays off

Take a remaining balance of 220,000 euros with your fixed period ending in 30 months. The current ten-year rate is 3.9 percent. A forward with 30 months lead time and around 0.02 percentage points premium per month costs you about 0.6 percentage points extra, so you lock in roughly 4.5 percent. At three percent repayment, that means a higher payment compared to a 3.9-percent loan signed later – one that only pays off if the market is well above 4.5 percent in 30 months.

If the market rate climbs to 5.0 percent by then, the forward was a good deal: you pay 4.5 instead of 5.0 percent on 220,000 euros, which over ten years brings roughly 8,000 to 10,000 euros in interest savings. If the rate stays at 3.9 percent, you are worse off at 4.5 percent and paid the difference for nothing. Always run such scenarios with concrete numbers instead of relying on a gut feeling – the difference between the options is decided in exactly these tenths of a percentage point. On balances this size, a single tenth of a point compounds into a meaningful sum over a full ten-year term.

How tools on CalcSI help

Before you sign a follow-up financing, run the variants yourself. With the loan calculator you work out the monthly payment, remaining balance and total interest for any rate and repayment scenario – ideal for putting prolongation, refinancing and forward side by side. The compound interest calculator shows what an early rate lock or an extra repayment yields over the years. With the percentage calculator you compute the forward premium and assignment costs as a share of your balance, and the real-estate transfer tax is already in view for your next property. That way you enter the bank meeting with solid numbers rather than the first offer on the table.