You want to sell your house and buy another, but continue the existing loan. The question is then not only how much credit is outstanding. It is also about whether the previous loan security can be replaced by another and how this change would be carried out without an unsecured interim phase. This article concerns Germany and does not imply an automatic entitlement in every relocation financing.
Distinguish continuation, repayment and new loan
First note which model you actually want to examine: a loan that continues unchanged with different security, a repayment followed by refinancing, or a combination with additional funds. These variants are easily mixed up in a conversation about “taking the loan with you”.
Our practical recommendation: Have each part described to you with amount, term and conditions. If the new house requires more financing, a possible continuation of the old loan does not yet answer how the additional amount will be financed. A rate that looks favourable today also does not alone explain the total cost of the move.
What the Bundesgerichtshof decided about exchange of securities
In the judgment XI ZR 398/02 of 3 February 2004 the BGH recognised, under certain conditions, a claim to consent to the mere exchange of agreed securities while the loan agreement otherwise continued to exist. The starting point was a legitimate interest in enforcement and a constellation in which redemption was not required. The exchange had to be reasonable for the bank without a conflicting protectable proprietary interest. [BGH]
The standard includes equally good risk coverage by the replacement land charge (Grundschuld), the willingness and ability to assume the associated costs and the absence of disadvantages, for example in administration or enforcement. This does not imply a general obligation to accept every more valuable property. [BGH]
Priority can be more important than a higher purchase price
In the decided case it was precisely the alleged availability of a first-ranking security that still had to be clarified. An exchange from first-ranking to second-ranking security was not easily reasonable because of the additional risk. The proceedings were therefore referred back for further factual examination. [BGH]
For your preparation this means: Ask about the concretely offered security and the rank that the existing bank could actually obtain. Which rights already exist and what other financing is to be added? An advertised price or a private valuation does not replace this clarification. Obtain the property documents required by the bank instead of deriving an already proven claim from the mere price difference.
Example: Higher house price, still open replacement security
In the fictional case a couple wants to sell a flat and acquire a more expensive house. The existing loan is to remain and additional funds are needed. In the first calculation the new house appears to be a sufficiently secure replacement property solely because of its higher price.
Only in the next step is it clarified which rank the existing bank could actually obtain and what conditions the additional financing imposes. The couple therefore does not yet have a negative result. However, they recognise an open condition that must be answered before binding commitments. The case contains neither a concrete bank decision nor a statement about current market values.
Connect both transactions in time
Our editorial recommendation: Map sale, purchase, creation of the replacement security and release of the previous security on a common timeline. Who may trigger which step under which conditions? The concrete arrangement will be coordinated between the bank and the legal purchase processing.
The interim case is also part of it: What is settled if the sale succeeds but the new purchase takes place later? What alternative exists if the desired exchange is not confirmed? A mere expectation should not already appear in the next purchase offer or in your own available proceeds as completed financing.
Record the answer for the specific model
Request a comprehensible written response with the still required proofs and conditions. In the case of a disputed refusal have the actual facts assessed professionally on the basis of the contract and the replacement security. The historic judgment is a standard for examination, not a substitute for these facts.
A usable plan therefore connects the loan to be continued, actually suitable security and a practicable transition. Only taken together do these points answer whether the desired retention of the loan fits your specific property change.