Two people finance their home together. One receives additional money and wants to use it to reduce the mortgage more quickly. For a good decision the additional amount and a desired transfer date are not sufficient. You should separately clarify what the bank does with the payment, what you intend between yourselves and whether a further legal arrangement is desired. This article concerns Austria.
Put the three levels on different sheets
The first level is the loan: which contract is to be reduced by which amount at what time? The second level is your internal agreement: should the paying person receive compensation later, is it an intentionally shared contribution or is that still undecided? The third level is ownership of the property.
These levels are not simply brought together by a transfer. § 431 ABGB requires the entry of the acquisition transaction in the public registers for the transfer of ownership of immovable property. [EIG] An additional loan payment should therefore not be treated as a completed change of ownership. Which agreement and arrangement is appropriate for your intention is assessed by the responsible legal advice.
Clearly state the intended internal effect
Discuss before the payment how each person understands it. “I am paying back our loan” can mean joint finances to one person and an additional contribution to be equalised later to the other. Neither of these interpretations should be merely assumed in everyday life.
Record the context of origin and use insofar as it is necessary for the advice. Is it personally available money, a still conditional gift or an amount that in turn serves other obligations? A mere promise of money is not confirmation that the funds are already available and suitably usable for this exact purpose.
Our editorial recommendation: submit these intentions in advance to professional advice and have explained what must be documented or arranged. This article neither determines a claim for compensation nor its amount and does not recommend a universal partner agreement.
Obtain information from the bank relating to this transaction
For loans in the relevant scope, § 20 HIKrG regulates early repayment. Paragraph 6 provides, in the case of a communicated intention to repay, information that quantifies the effects and states the assumptions used. [HIK] You therefore need an appropriate statement for the actually intended amount and time, not an arbitrary example calculation.
You should also clarify which documents and declarations are required for the joint contract and how the payment will be allocated. An existing contractual access for one person does not automatically answer all authorisations for changes. The bank explains the concrete procedure based on your contract.
Contract date, interest agreement and, where applicable, securities remain important classification questions. This article does not calculate any compensation, does not claim an always free-of-charge special payment and does not transfer a rule for another contract to your loan.
Example: cash payment and desired ownership diverge
In a completely fictitious case one person wants to pay in a larger available amount. They expect a correspondingly larger share of the sale proceeds later in return. The other person had understood the payment as a joint contribution to the ongoing household.
Before money flows, this difference is made visible. Both have the intended arrangement and the existing contractual framework clarified. The bank statement on the loan does not replace this internal agreement; conversely an internal agreement does not replace the actually required bank procedure or a desired ownership arrangement.
Consider the remaining joint reserve
Also check your cash needs after the payment. Which funds are already intended for foreseeable expenses? Are different private reserves thereby changed? Do not plan the same amount both as a special payment and as an immediately available household reserve at the same time.
After an agreed execution you collect the bank confirmation and the updated loan balance. In addition, keep the appropriate documentation of your internal agreement. This separate filing in particular helps later: you can recognise what was actually paid to the loan and what legally reviewed intention existed between you. A quick debt reduction and a fair joint arrangement are two tasks that should be consciously linked.