A letter from your bank shows that the euro equivalent of the mortgage has risen significantly. You want to convert the loan into euros and may assume that the original exchange rate will simply be reapplied. For a reliable enquiry, however, two questions must be answered separately: Does the statutory conversion right apply to your contract, and at which exchange rate would the conversion take place?
This article addresses the current German statutory framework for consumer mortgage loans. It does not recommend a timing for switching. An Austrian existing financing is not legally assessed here.
First assign the contract to the correct framework
§ 491 Absatz 3 BGB describes consumer mortgage loan contracts and their exceptions. A reference to real estate or the heading Wohnkredit alone does not replace this classification. Therefore provide the complete contract, date of conclusion and subsequent amendments for an appropriate contract review. [ART]
The date of conclusion is particularly important for older foreign currency loans: Article 229 § 38 Absatz 1 EGBGB generally refers to the law in force at the time for consumer loan agreements concluded before 21 March 2016, subject to the exception mentioned there. The current conversion right must therefore not be transferred to every old contract solely on the basis of a current account statement. This article does not apply a transitional rule to your individual case. [ZEIT]
Find the relevant domestic currency in the contract
§ 503 Absatz 1 BGB initially links to the currency of the EU member state in which the borrower had their habitual residence at the time the contract was concluded. A later current place of residence is therefore not automatically the relevant starting point. [UMW]
However, the provision permits a contractual agreement according to which the currency of the predominant income or certain repayment assets is exclusively or additionally decisive; the reference point is the relevant creditworthiness assessment. Therefore do not just search for the word Euro. Ask to be shown which specific contractual clause determines the domestic currency relevant to your case and which facts at that time it refers to. [UMW]
Check more than 20 percent with the same basis of comparison
The statutory right exists under the conditions of § 503 if the value of the outstanding remaining balance or the regular instalments in the relevant domestic currency due to the exchange rate change is more than 20 percent higher than the value that would result using the contract exchange rate at the time of conclusion. Thus not only an attention-grabbing exchange rate report or any change since the last account statement is decisive. [UMW]
An entirely hypothetical calculation assumes an unchanged remaining debt of 50.000 francs and euro as the relevant domestic currency. At an assumed contract exchange rate of 1 euro per franc that would be 50.000 euros. With a different freely chosen assumption of 1,22 euros per franc it is 61.000 euros. The exchange-rate-induced difference is 11.000 euros, i.e. 22 percent of the comparison basis.
At 1,20 euros per franc, however, it would result in 60.000 euros and exactly 20 percent. Exactly 20 is not more than 20. The calculation only illustrates the threshold. It does not confirm a claim from a real contract. All exchange rates are invented; fees, interest and actual repayment movements are not included.
For your case, ask for a comprehensible comparison of the same outstanding foreign currency amount or the relevant instalment with the contract exchange rate and the current comparison exchange rate. The original total loan amount and the remaining debt already repaid are not compared against each other without explanation.
Warning information and conversion are different processes
§ 493 Absatz 4 BGB obliges the bank in the cases regulated there to inform without delay when the 20 percent threshold is exceeded. For the foreign currency loan dealt with here, the provision names, among other things, a durable medium, the change in the remaining balance and references to the possibility and conditions of conversion. Information about this is not yet a currency conversion you have already initiated. [INFO]
Keep the letter with the contract and calculation. If a comprehensible derivation is missing, specify precisely this query. The legal examination of your eligibility and the economic assessment of a conversion remain necessary in each case.
The conversion exchange rate cannot simply remove the previous loss from the calculation
§ 503 Absatz 2 generally provides for the market exchange rate on the day of the conversion request, unless the contract provides otherwise. That is a different question from the historical rate with which the 20 percent threshold is compared. [UMW]
Therefore demand a concrete explanation of the reference date, applicable rate rule, new debt amount and the payments then applicable. A desired return to the earlier euro equivalent is not an already established result. Which costs or other contractual consequences are actually permissible and relevant must be clarified on the basis of the specific agreements.
The useful result of your preparation is a comprehensible point of review: relevant contract, applicable domestic currency, documented threshold comparison and understood conversion terms. Only then can it be decided whether and with what content you demand a conversion. The article does not call for stopping ongoing payments on your own.