Repayment Schedule

An amortization schedule is a tabular overview that shows, for each period of the loan term, the breakdown of the monthly payment into interest and principal, the remaining balance after each payment, and the progression of the interest burden. It allows borrowers to know the exact status of their debt at any given time and to structure their long-term financial planning. Banks are legally required to provide the borrower with an amortization schedule upon signing the contract.

How does an annuity loan and its amortization schedule work?

The dominant financing model for real estate loans in Germany is the annuity loan: The monthly payment (annuity) remains constant during the fixed-rate period, but the internal breakdown between interest and principal repayment shifts continuously. At the beginning, the interest portion is high because the remaining debt is large; with each principal payment, the remaining debt decreases and thus the interest portion-the principal portion increases accordingly. This “increase in principal repayment through interest savings” significantly accelerates debt reduction over time.

A concrete example: For a loan of 300,000 euros, a 3.5% interest rate, and an initial principal repayment of 2%, the monthly annuity is approximately 1,375 euros. In the first month, approximately 875 euros of this amount goes toward interest and 500 euros toward principal. By the tenth year, approximately 750 euros goes toward interest and 625 euros toward principal-with the same monthly payment. At the end of the 15-year fixed-rate period, the remaining debt is approximately 221,000 euros-despite 15 years of payments. This illustrates why an initial repayment rate of 3% or more makes sense.

What exactly does the repayment schedule show?

A complete repayment schedule contains the following information for each month or year:

• Initial outstanding balance: The outstanding loan amount at the beginning of the period
• Annuity (total payment): The monthly payment, which remains constant during the fixed-rate period
• Interest portion: Nominal interest rate multiplied by the current outstanding balance (1/12 of the annual interest rate per month)
• Principal portion: Annuity minus interest portion - the portion that actually reduces the outstanding balance
• Final outstanding balance: The outstanding balance after deducting the principal payment
• Extra payments: If agreed upon, the unscheduled additional payments and their effect on the remaining balance

At the end of the fixed-rate period, the repayment schedule shows the remaining balance, which must then be extended or refinanced. Those who know this figure early on can plan their follow-up financing optimally - for example, through a forward loan that locks in future interest rates today.

How the repayment schedule is used for extra payments

The repayment schedule is also the tool for understanding the effect of extra payments. Modern online calculators (e.g., from Interhyp or Dr. Klein) allow you to incorporate extra payments into the schedule and see how the remaining balance and the total term change. If you want to see how many years a one-time extra payment of 10,000 euros saves, you’ll get clear answers here-and this often motivates you to make regular extra payments.

After each extra payment, the bank provides an updated repayment schedule that reflects the new remaining debt and the new repayment schedule. We recommend requesting and keeping this updated schedule after every extra payment.

Repayment Schedule and Taxes for Rental Properties

For rental properties, the repayment schedule is relevant for tax purposes: Only the interest portion of the annuity payment is deductible as income-related expenses-the principal portion is not, as it does not represent an expense but rather a conversion of debt into equity. The repayment schedule provides the exact interest amounts per calendar year that the tax advisor needs for the income tax return. We recommend that landlords provide their tax advisor with the current repayment schedule annually to ensure accurate income-related expenses and avoid errors in the tax return.

Important: For a loan that spans the calendar year, the interest paid in December and January must be allocated to the respective calendar year, even if the payment extends marginally into the next year. The repayment schedule clearly shows the annual interest.

Practical Tip for Property Owners in Nuremberg and Franconia

In Nuremberg and the Franconia metropolitan region, many property owners purchase with an equity share of 20-30% and finance the remainder through loans. With typical purchase prices ranging from 300,000 to 700,000 euros for condos and single-family homes, the resulting loans are substantial. Careful analysis of the repayment schedule is therefore essential-especially with regard to the remaining debt after the fixed-rate period expires.

When planning your financing, we recommend not setting the repayment rate too low: An initial repayment of at least 2% per year ensures that the remaining debt has decreased significantly by the first renewal after ten years. With a repayment rate of only 1%, the remaining debt after ten years may still be nearly as high as it was at the start-a significant risk if interest rates have risen by then.

Contact us-we’ll connect you with independent financial advisors in the region who can create a personalized repayment plan tailored to your income situation and calculate various repayment scenarios.

Frequently Asked Questions

How long does it take to fully repay a mortgage?

The total term depends heavily on the initial repayment rate and the interest rate. As a guide: With a 2% initial repayment rate and a 4% interest rate, the total repayment period is approximately 28-33 years. With a 3% repayment rate, the term shortens to approximately 21-25 years. Extra payments can shorten the total term by an additional 5-10 years, depending on their frequency and amount. A fully amortizing loan, where the repayment schedule is structured so that the loan is paid off exactly within the fixed-rate period, offers the shortest and most predictable option.

Does every mortgage have a repayment schedule?

Yes. According to Section 492 of the German Civil Code (BGB) in conjunction with the EU Mortgage Credit Directive (Art. 17 MCD), banks must provide the borrower with a complete repayment schedule upon signing the contract-this is a legal obligation, not a courtesy. For annuity loans, the plan shows the entire fixed-rate period with all monthly payments. For variable-rate loans, where the interest rate fluctuates, the repayment schedule is updated regularly (e.g., annually) and made available to the borrower.

What happens after the fixed-rate period ends according to the repayment schedule?

The repayment schedule ends with the conclusion of the fixed-rate period and shows the outstanding balance at that time. This outstanding balance must either be paid off in full using existing equity (which is rarely the case) or refinanced under new terms through follow-up financing. The follow-up financing can be arranged with the existing bank (loan extension) or with another bank (refinancing). We recommend obtaining offers at least 12-18 months before the fixed-rate period expires to avoid having to accept unfavorable terms under time pressure.

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