Loan fee

Loan Fee - A loan fee is a one-time or recurring fee charged by a bank for granting, processing, or managing a mortgage. In the past, processing fees were common for mortgages; however, in 2014, the Federal Court of Justice (BGH) ruled that processing fees for consumer loans are unlawful. Today, the main fees associated with mortgage loans are commitment fees, appraisal fees, and account maintenance fees.

Types of Loan Fees

• Processing fee: A one-time fee for credit checks and processing - prohibited for consumer loans according to the BGH ruling (Case Nos. XI ZR 405/12 and XI ZR 170/13), as the credit check is conducted in the bank’s own interest
• Commitment interest: Ongoing fee on the portion of the loan amount not yet drawn down - typically 0.25% per month (3% p.a.). Becomes due once the commitment interest-free period (2-12 months) has expired
• Appraisal fee / Valuation fee: One-time fee for the appraisal of the property being financed - 200-500 euros, sometimes higher
• Account maintenance fee: Annual fee for the special loan account - 25-60 euros/year, abolished by many banks
• Partial disbursement surcharge: Fee for multiple partial disbursements (e.g., based on construction progress) - 50-150 euros per partial disbursement

Case Law and Consumer Protection

The Federal Court of Justice (BGH) has strengthened consumer protection regarding loan fees in several rulings:

• Processing fees in general terms and conditions are invalid (2014)
• Account maintenance fees for special loan accounts are also contestable if no separate service is provided
• Commitment interest and appraisal fees, on the other hand, are generally permissible, as they compensate for specific services

The BGH rulings from April 2014 (XI ZR 405/12 and XI ZR 170/13) triggered a wave of refund claims: millions of consumers were able to reclaim previously paid processing fees, provided the three-year statute of limitations had not yet expired. Anyone who took out a loan between 2004 and 2014 and is unsure whether a processing fee was charged at the time should review their loan documents. For loans taken out after 2014, processing fees should no longer apply-if they do appear, they are invalid and can be reclaimed.

Comparing the Effective Interest Rate and Total Costs

When selecting a mortgage, borrowers should compare not only the nominal interest rate but also the effective annual interest rate, which includes all ongoing mandatory fees. One-time costs such as appraisal fees and commitment interest, on the other hand, are not always fully factored into the effective interest rate-depending on the calculation method and timing, they may be excluded. Anyone comparing multiple offers should request a complete breakdown of total costs for the planned term from each provider. Only then is a fair comparison possible, one that takes all ancillary costs into account and exposes false advantages resulting from low nominal interest rates combined with high ancillary fees.

Overview of Loan Fees - Permissibility and Typical Amounts

Fee Type	Permissibility	Typical Amount	Legal Basis
Processing Fee (Consumer Loan)	Not Permitted (Terms and Conditions)	N/A	BGH XI ZR 405/12
Appraisal fee / Valuation	Permissible	€200-500	Bank’s internal discretion
Commitment interest	Permissible	0.25%/month	Contractually agreed
Account maintenance fee	Permissible with restrictions	€25-60/year	Case-by-case review
Partial disbursement surcharge	Permissible (specific service)	€50-150/drawdown	Contractually agreed
Extension fee	Not permissible in GTC	Not applicable	BGH case law

Commitment Interest on Construction Projects

Commitment interest is a significant cost factor, particularly for new construction and major renovation projects. If construction is delayed-which frequently occurs in Nuremberg’s older building stock due to unforeseen findings-commitment interest increases accordingly. For a loan of 300,000 euros and a commitment interest rate of 0.25% per month, a six-month delay beyond the commitment-free period results in 4,500 euros in additional costs. Therefore, the length of the commitment-free period is a key negotiating point that many borrowers underestimate.

Some banks offer to extend the grace period to 12 or even 24 months for a minimal interest surcharge (0.02-0.05 percentage points). For construction projects requiring complex permits or unforeseen renovation steps, this option can save significant costs.

Practical Tip for Homeowners in Nuremberg and Franconia

We recommend that borrowers in the Nuremberg metropolitan area treat the interest-free grace period as a key negotiating point during financing discussions. Especially for new construction or renovations, where disbursement can be delayed-for example, due to supply bottlenecks for building materials, official approval periods, or unforeseen findings in older buildings-a longer grace period can save significant costs. Compare the ancillary costs of different offers carefully: appraisal fees and partial disbursement surcharges can add up to 500-1,500 euros and should be taken into account when comparing offers.

Frequently Asked Questions

Can I reclaim processing fees I have already paid?

In 2014, the Federal Court of Justice (BGH) ruled that processing fees for consumer loans are prohibited in standard terms and conditions. Fees already paid could be reclaimed within the then-applicable three-year statute of limitations. For loans taken out after 2014, no processing fees should have been charged. If you nevertheless discover such a fee in your records, you can file a written complaint with the bank and request a refund. If the bank refuses to refund the fee, the Ombudsman’s Office of the Association of German Banks can assist as a free arbitration body. In practice, most banks refund unjustified fees as soon as they are confronted in writing.

Is the commitment fee negotiable?

Yes-both the amount (0.25% is standard in the market; some banks offer 0.15-0.20%) and the commitment fee-free period are negotiable. For new construction, we recommend agreeing to at least a 6-month grace period-and for complex construction projects in Nuremberg’s Old Town or on historic buildings, we recommend 12 months. Some banks offer an extension for a minimal interest surcharge (0.02-0.05 percentage points), which pays off significantly during long construction phases. Don’t forget to have the grace period specified in writing in the loan agreement-verbal agreements are difficult to prove in the event of a dispute.

What fees apply for refinancing?

In the case of a renewal (extension with the same institution), there are generally no processing fees-the effort for the bank is minimal. In the case of a refinancing with another bank, notary and land registry fees apply for the transfer of the mortgage (approx. 200-500 euros), as well as a new appraisal fee if applicable. A new mortgage registration is not required if the existing mortgage is transferred. The savings from a lower interest rate usually far outweigh these costs. We recommend obtaining offers for follow-up financing at least twelve months before the fixed-rate period expires-competition among providers and sufficient time to negotiate are the best ways to secure favorable terms.

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