Penalty in case of withdrawal from a mortgage agreement

[Aldel]

Good evening, everyone on here!

I am reaching to you for an advice on our situation:
my daughter is buying an apartment form a seller, who is permanently based abroad.
The seller will not be present to sign the purchase agreement, and his representative does not have Power of Attorney, hence once the contract is signed by my daughter, it will not be legally “valid” until the seller provides his signature certified by a notary at a German Consulate in his country, which can take some time…
As my daughter needs to take a mortgage for this purchase, she might potentially need to sign the Mortgage Agreement before this approved purchase agreement is received from the seller.

I am trying to understand what would happen if she needs to cancel the mortgage agreement after the end of the cancellation-free period if the notarised agreement from the seller is not received (e.g., the seller passed away/changed their mind /something else).
My understanding is that the mortgage provider would not release the funds ( as no “valid” purchase agreement), but I am struggling to understand penalty calculation in this case.
I would greatly appreciate any guidance:)

[PandaMunich]

I am trying to understand what would happen if she needs to cancel the mortgage agreement after the end of the cancellation-free period if the notarised agreement from the seller is not received (e.g., the seller passed away/changed their mind /something else).
My understanding is that the mortgage provider would not release the funds ( as no “valid” purchase agreement), but I am struggling to understand penalty calculation in this case.
I would greatly appreciate any guidance:)

If she cannot buy another property instead for which to use the mortgage, the bank would do a calculation based on the profit that they are now missing out on over the duration of the mortgage.
The amount they will want from your daughter is called Vorfälligkeitsentschädigung.

Please see here for an example: https://www-arzt--wirtschaft-de.transla ... _hist=true

• The Federal Court of Justice has once again confirmed that it is better to wait before taking out a loan. In a judgement published at the end of last year (case no. VZ R 11/17), the judges clarified that a seller can back out at any time up to the notary appointment. In this case, the prevented buyer had taken out a loan of 300,000 euros to finance the property. The bank wanted 9,000 euros in early repayment compensation as compensation for cancelling the loan agreement. The borrower was left having to bear this cost.

[Aldel]

Thank you!
So, even if the funds would not be released, calculate the bank „lost profit“
Complex case, especially for her first purchase.
Looks like we need to find a different apartment instead.