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hypothek-abloesen

Remortgaging: when to terminate and when to switch.

Key points at a glance
Remortgaging means changing mortgage model or provider. Notice periods and contractual terms must be observed. Early termination can be expensive.

When should I remortgage?

There are many reasons to remortgage. This often happens when the term of a fixed-rate mortgage ends and the need arises for another provider or a different mortgage model. In the case of a variable-rate or SARON mortgage, interest rates may be another reason for remortgaging. If you expect interest rates to rise, it may make sense to switch to a fixed-rate mortgage with a fixed interest rate for several years. If interest rates fall, the interest rate on the fixed-rate mortgage will remain unchanged and may appear comparatively high, which may encourage people to opt out early. In principle, this is possible, but sometimes entails additional costs (early repayment fee, also referred to as a penalty) that need to be weighed up. An early exit is only worthwhile if the expected interest savings exceed the costs associated with the switch. Independent advice can help you decide.

How do I remortgage?

In principle, exiting a mortgage or switching to a different model is always possible. However, how easy it is to remortgage depends on the mortgage model and the associated notice periods.

Variable-rate mortgage

Variable-rate mortgages have no contractual term and can be redeemed easily, taking into account the notice period.

Available at any time

Fixed-rate mortgage

For a fixed-rate mortgage, the term and the agreed interest rate are binding. It is advisable to only remortgage a fixed-rate mortgage at the end of the term. Early cancellation is possible. However, an early repayment charge will apply in this case. This is calculated on the basis of the interest rate, residual term and processing fees. Switching to a competitor bank can increase costs even further, sometimes to tens of thousands of francs. A few providers offer fixed-rate mortgages with a switch option. This means that you can switch to a longer fixed-rate mortgage during the term, provided that the interest rate of the new mortgage is at least the same.

Note contract duration

SARON mortgage

With a SARON mortgage, the interest rates are variable and adapt to the market, but you usually have a framework agreement with a fixed term. Early cancellation may therefore also result in early repayment charges. It is often possible to switch from an existing SARON mortgage to a fixed-rate mortgage with the same provider. The conditions of the contract and interest rate developments are key.

Flexible interest rate, but usually with a fixed term

Our tips for remortgaging.

Plan early

Think about how you want to continue with your fixed-rate or SARON mortgage around a year before expiry of the term

Note the notice period

Make a note of the date of termination so that you can switch to a different product in good time

Observe interest rate trends

Keep an eye on interest rates to make a favourable change in good time

Calculate costs

Factor in all costs associated with a cancellation before switching to a cheaper offer

Get advice

Seek advice from an expert to find the best options for remortgaging
Contact & Consultation. Find the right mortgage now.

MoneyPark will help you find the right mortgage with independent, personal advice. We take into account attractive conditions, as well as your pension and tax situation.

What others wanted to know.

Our mortgage experts give an insight into a selection of the most frequently asked questions. Submit your own question. We will be happy to help you.

Théo L. (49), Winterthur

What is an early repayment charge?

An early repayment charge is a fee charged by the bank if a borrower redeems the mortgage before the agreed expiry of the term. Fixed terms apply to fixed-term mortgages or SARON mortgages with a fixed-term framework agreement. The early repayment charge compensates for the bank’s lost interest income.

original

Alessio Faina

Market Expert Financing & Real Estate

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Thomas S. (44), Ittigen

When is it worth terminating your mortgage early?

Exiting the mortgage early may be worthwhile if the savings from a lower interest rate exceed the cost of the early repayment charge. Early repayment charges are tax-deductible in some cantons. Independent advice can help you decide.

original

Luanah Lehmann

Real Estate Expert

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The current most attractive mortgage interest rates.

Saron mortgage from*

0.65%

Fixed-rate 10 years from

1.37%

Fixed-rate 5 years from

1.03%
* The value shown here for a SARON mortgage is made up of the current SARON (Swiss Average Rate Overnight) and the individual margin of the mortgage lender. Generally speaking, the interest rates shown are the best conditions currently available. Your personal interest rate may differ based on the loan-to-value ratio, affordability, mortgage volume and location of the property.

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