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Glossary of mortgages

Dubious loan providers

Glossary of mortgages

Below we explain the 50 most important terms around mortgages. You can have a say in a consultation and understand the technical terms that the consultant will use to present his offer

Dubious loan providers

1. Sole ownership

Sole ownership is a possible form of ownership when buying a house. Only one owner is entered in the land register, which is also possible for married couples.

2. Amortization
This means the partial or complete repayment of a mortgage. It usually takes place when the interest is paid and should be completed within 15 years, but at the latest when you retire.

3. Repay the mortgage
The repayment of the mortgage is equivalent to the termination and continuation of the same with another provider. This usually involves prepayment penalty.

4. Building loan
The building loan is not a mortgage, but will be converted into one after the construction work has been completed. In the case of a new building, the building loan may only be used when the own funds have been used up.

5. Lending
A mortgage lender usually only finances up to a maximum of 80 percent of the property; if additional collateral is available, a higher mortgage is possible.

6. Guarantee
In the case of a guarantee, the guarantor undertakes to assume the payment obligations if the main debtor no longer meets these. 

7. Cap
A cap is an upper limit of interest that has been agreed between the debtor and the creditor. A cap is only available with a variable interest rate like the Libor mortgage.

8. Direct payback
The opposite of indirect amortization means paying off the mortgage to the bank in tranches on a regular basis. The mortgage debt is reduced evenly, which increases the tax burden.

9. Third pillar
Every Swiss person always pays into the first pillar, every employee into the second pillar. Pillar 3 provision is voluntary and is carried out privately. It plays an important role in real estate financing.

10. Equity
At least 20 percent equity must be available to buy a property. This can come from various sources, at least 10 percent of which may not come from the 2nd pillar.

11. Own rental value
The rental value is a fictitious income that is attributed to property owners. This portion has to be taxed. 

12. Form of ownership
The form of ownership is entered in the land register and can be sole, joint or total ownership. This is especially important when married couples purchase property.

13. First mortgage
This is granted up to a maximum lending value of 65 percent and can be agreed without a fixed term. Nevertheless, it has to be repaid after a certain number of years.

14. Family mortgage
This is a special form of mortgage that is only offered by a few credit institutions. There is a discount on the interest rates, although this discount is limited in time.

15. Fixed-rate mortgage
The fixed-rate mortgage runs for a fixed period, which can be up to 20 years. The interest rate remains the same over the entire term.

16. Forward mortgage
This mortgage is closed in advance and can be agreed up to 24 months before it actually begins. This is usually associated with a fee.

17. Total property
Through a community of heirs or through the marriage contract, several owners can exist on one property. They have equal rights and obligations among one another. 

18th mortgage bond
Here, the creditor counts a mortgage note as a mortgage and thus becomes the authorized owner of the security object.

19. Mortgage
The mortgage is a lien on a property. However, the term is usually used synonymously for the loan or for the loan. 

20. Mortgage lender
The provider of a mortgage is the mortgage lender. This can be a bank, insurance companies or pension funds. 

21. Mortgage model
There is a fixed, variable and Libor mortgage, all three types of mortgage are offered on an equal footing in Switzerland.

22. Mortgage rate
This means all costs that are related to the mortgage and that are payable by the mortgagee. 

23. Mortgage calculator
Here on neotralo.ch you use a mortgage calculator to find the best provider for your property financing project.

24. Real estate valuation 
The mortgage lender values a property and determines the value regardless of the purchase price. This value is the basis for the calculation of portability and lending.

25. Indirect payback
With indirect amortization, the mortgage is repaid through pillar 3a, and the mortgage amount does not decrease during the term. 

26. Calculatory interest rate
This is used to calculate the portability and is usually five percent. It is a historical average.

27. Purchase price
The purchase price of a property is the value that the seller and buyer have agreed on. It can differ from the market value. 

28. Term
The term is set for each mortgage and can be up to max. 25 years going. The agreed interest rate remains the same over the specified term. 

29. Libor mortgage
This form of mortgage is based on a Libor rate that is adjusted regularly. This adjustment usually takes place on a quarterly basis. 

30. Minergie
Experts call minergie the energy standard that is achieved for so-called low-energy houses. Improving Minergie brings tax benefits.

31. Co-ownership
At least two owners share the property or ownership of it. There can be various ownership quotas that are recorded in the land register.

32. Utilities
The ancillary costs are important for the affordability calculation and indicate the costs that must be taken into account in addition to the mortgage interest. They are accepted with 1 % of the property value per year. 

33. New mortgage
A new mortgage is the mortgage that is taken out when you buy a property. Its counterpart is follow-up financing, which denotes the continuation of an existing mortgage.

34. Usufruct
Usufruct is the right to be entered in the land register to treat a property as property. 

35. Object value
The property value is not the same as the purchase price or can differ from it. The term is used synonymously for the market value. 

36. Offer
Non-binding offers on the part of the mortgage lender are regarded as offers. It includes the selected mortgage product and the interest rate offered.

37. Online mortgage
The customer does not have to appear in person at an advisor in the bank, but can take out the mortgage online. It is possible to complete the entire transaction by phone or email. 

38. Online mortgage extension
The customer and the advisor do not meet in person, but the extension of the mortgage takes place online.

39. Pension fund
This means old-age provision for working people, all Swiss workers have to pay in here. The second pillar credit is not suitable for securing a mortgage. 

40th benchmark rate
The benchmark rate is also known as the window rate and means the mortgage rate offered for a fixed term. It is often still negotiable. 

41. Rollover mortgage
The name of this type of mortgage is just another one for the Libor mortgage. Please refer to this term for an explanation. 

42nd note
The mortgage note is created when the mortgage is issued and recorded in the land register. It stands for the lien, which the mortgage lender has secured. 

43.Saron
The saron is to replace the Libor and is the reference interest rate. The price for this is determined on a special platform at the Swiss stock exchange.

44. Portability
It describes the relationship between gross income and the ongoing costs of financing real estate.

45. Portability calculator
This allows the portability and the necessary income of the future mortgage holder to be determined in advance. 

46. Maintenance costs
These are the costs that are required to maintain the property. They are accepted at 0.4 percent of the purchase price when calculating mortgages. 

47. Over-lending
A mortgage of more than 80 percent is possible if additional security is brought in. These mostly come from the 3rd pillar. 

48. Variable mortgage
It is flexible and does not offer a predefined term. The notice period is comparatively short at three to six months.

49. prepayment penalty
This is due if a mortgage is canceled before it expires. The amount of the compensation depends on the remaining term and the current reinvestment interest.

50th extension
The mortgage can be extended, which is possible with another provider or with the previous mortgage lender. A comparison about ours Mortgage comparison showswhich is the better alternative in individual cases.

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Mortgage: 5 examples of calculations

Legal regulations

Mortgage: 5 examples of calculations

The following calculation examples can be used to get an overview of how high the costs for the mortgage will be or which own funds must be brought in. Of course, they have to be replaced by other figures in individual cases, but they give an insight into how the bank proceeds with the calculation.

Legal regulations

Calculate the necessary annual income

The following calculation example will show that you need an annual income of CHF 180,000 net for a property that is to cost CHF 1 million and for which you can raise CHF 200,000 in equity. The reason for this is that housing costs must not exceed 35 percent of net income.

Purchase price: 1,000,000 francs
Equity: CHF 200,000
Capital through mortgage: CHF 800,000

Division into 
1st mortgage: 520,000 francs
2nd mortgage: CHF 280,000

Interest on 1st mortgage (4.5 %): CHF 23,400
Interest on 2nd mortgage (5.5 %): CHF 15,400
Amortization of 2nd mortgage in 20 years: CHF 14,000

Additional costs: 10,000 francs
Running costs: CHF 62,800 

The result is that the mortgagee needs an income of around CHF 180,000 a year ((62,800 x 100) / 35).

To calculate the affordability, the calculated interest, the maintenance and ancillary costs and the amortization are added. The sum is then divided by the annual net income. This results in the value with which the annual income is charged. This value must not exceed 33 percent! Here is a calculation example:

Market value of the property: 750,000 francs
Equity: CHF 150,000
Borrowed capital: CHF 600,000
Income per year: CHF 142,000

Interest on the 1st mortgage (5 %): 500,000 x 5 % = 25,000 francs
Interest for the 2nd mortgage (6 %): 100,000 x 6 % = 6,000 francs
Total interest: CHF 31,000

Amortization in 15 years: 100,000 / 15 = 6,667 francs

Maintenance and incidental costs (1 % from the market value): 7,500 francs
Total annual costs: 45,167

Portability: 45,167 / 142,000 = 31.81 percent

Conclusion: The portability of the mortgage is less than 33 percent and is therefore certain.

There is a simple rule of thumb to calculate the maintenance and ancillary costs for the above example: The banks apply one percent of the market value of the property. This amount must be reserved annually for the property. This one percent value consists of 0.4 % for maintenance and 0.6 % for utilities. This is calculated as follows:

Market value of the property: 1,200,000 francs 
Maintenance costs: 4,800 francs
Additional costs: 7,200 francs
Total costs per year: CHF 12,000

Basically, you need the purchase price of the property, your equity and the required capital from the bank or an insurance company to calculate the mortgage. From this, the mortgage can be calculated in a few steps.

The bank will incorporate any subtleties in the calculation into its detailed offer. The possible mortgages and the affordability of the mortgage can be calculated from the values for the annual costs and household income. Another calculation example:

Purchase price of the property: CHF 600,000
Annual gross income: CHF 120,000
Own funds: CHF 120,000

Required mortgage: CHF 480,000
Lending: 80 percent
Portability: 29 percent

Maintenance and ancillary costs: CHF 6,000 per year (CHF 500 per month)
Indicative interest rate: 1.12 %
Interest costs: CHF 448 per month
Amortization: CHF 444 per month

Costs per month: CHF 1,392

If you are wondering whether renting or buying is the better option, you should also do a calculation:

Purchase price of the property: CHF 600,000
Own funds: CHF 120,000
Mortgage rate: 1.21 percent
Additional costs: 6,000 francs per year

Rent for comparison: CHF 600 a month
Consideration period: 10 years

In this case, renting is significantly cheaper, over a period of 10 years you can save more than CHF 91,000. In both cases, the existing capital is offset. The problem is, however, that after ten years the rental property has not passed into your own assets.

If you pay off a mortgage, you will acquire long-term property that can also be used as a pension. It can be sold again and generally represents a profit. However, if you only live for rent, the landlord receives the money and can invest it.
You can find favorable offers with our mortgage comparison. "}" Data-sheets-userformat = "{" 2 ": 1063763," 3 ": {" 1 ": 0}," 4 ": {" 1 ": 2," 2 ″: 15395558}, "7": {"1": [{"1": 2, "2": 0, "5": {"1": 2, "2": 11775129}}, {"1 ″: 0, “2 ″: 0,“ 3 ”: 2}, {“ 1 ″: 1, “2 ″: 0,“ 4 ″: 1}]}, “9 ″: 0,“ 11 ″: 4 , “12 ″: 0,“ 14 ”: {“ 1 ″: 2, “2 ″: 0},“ 15 ″: “\“ Helvetica Neue \ ““, “16 ″: 10,“ 23 ″: 1} "Data-sheets-textstyleruns =" {"1": 0}? {"1": 143, "2": {"2": {"1": 2, "2": 1136076}, "9": 1}}? {"1": 162} "data-sheets-hyperlinkruns =" {"1": 143, "2": "http://neotralo.ch/de_ch/hypothekenvergleich/"}? {"1" : 162} “> After moving out of the rented apartment there is no property, there is no added value. You can find favorable offers with our Mortgage comparison.

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Mortgage in old age: How can my property remain portable?

Why is private provision important?

Mortgage in old age: How can my property remain portable?

Most homeowners do not want to buy their own property in order to sell it again profitably later. Rather, they are concerned with the fact that they can live here until the end of their lives and that they therefore have low housing costs.

However, this is only possible if the correct investment strategy has been selected beforehand. In addition, the project of living in one's own property until one's own death can only be implemented if the costs per month are manageable and the mortgage debt has been repaid before retirement or at least the majority has been paid off.

Why is private provision important?

Payback is important

At best, the whole project is? Buying a house through a mortgage? Carefully considered and secured from the start. Debt should be reduced until retirement to a level that can easily be borne even with a low income. At best, the entire mortgage is paid off by that time. Only then is it possible that your own property can really be inhabited even in old age. 

Most mortgage borrowers choose indirect amortization for the repayment of the mortgage, in which the amount of the debt remains the same over the entire term. Accordingly, interest rates are always the same and do not adjust either up or down. The fixed amount is not paid to the mortgage lender, who does not receive any tranches. Rather, the amount in question is paid into pillar 3a of the pension scheme, which has a positive tax effect.

Because: Both the interest payments and the payments into the retirement savings account can be tax deductible. The money that has been saved here will later be used to repay the mortgage debt. In the best case, the calculation is such that the mortgage has dropped so far that interest no longer represents a burden in old age.

It is also possible to pay off the mortgage completely or to pay it off even after retirement. Your own life situation is just as important for this as the financial options that can be used. For all mortgage takers, it is therefore particularly important that they take out high mortgages as young as possible so that they really have the chance to repay the money up to their old age.

In addition, the right mortgage strategy should always be used, because this is crucial for the success of the project? Buying a house through a mortgage ?. Against this background, it is always important that a comparison of the providers is made before the mortgage is taken out, as is possible via neotralo.ch.

Simply pass on your own home?

In old age, even with good planning, it can happen that the costs for the property can no longer be borne. If you do not want to part with your property, you can now pass it on to your own children (or to other relatives). This is also possible if the property is still burdened by a mortgage.

It is therefore mandatory that the mortgage lender approves the transfer. The former owners can still keep the right of residence, but this should be entered in the land register and notarized. A registered usufruct is also possible. 
If the parents have passed the house on to their children, they must pay tax on the rental value and, conversely, are exempt from all other obligations.

The children are responsible for all payments related to the mortgage and must therefore pay the interest. In the event of usufruct, the parents can dispose of the property almost without any restrictions, can even rent it and use the income from this rental as income. But you also have to pay taxes, bear the additional costs, interest on the mortgage and insurance costs.

The children are solely responsible to the mortgage lender and can be used if the interest payments fail to materialize. However, you can also take this over entirely. However, this procedure has a disadvantage: the usufruct is entered in the land register and reduces the value of the property.

Tips for real estate in old age

It all depends on the right planning: whether you can still live in your property in old age and take out the mortgage depends on the planning and the choice of the right mortgage strategy. The following tips should help to secure the property in old age:

  • Plan in time

    When you reach the age of 55 at the latest, you should check whether your property is still viable when you retire. This leaves you with a few more years to make changes and increase savings in the 3a pillar or to amortize the mortgage. If you are unable to do this yourself, contact your bank advisor, who can calculate the amortization for you.

  • Save, save, save

    The current low interest rates will probably not last long and then rise slowly. For you, this means that you should save as much as possible now. After retirement, you can then use the saved capital to amortize the mortgage. However, keep a reserve of cash and cash equivalents, because there can always be unforeseen expenses. You should still be able to contest these, because after retirement it is difficult or impossible to top up the mortgage again. Therefore: Do not use all of your own funds to amortize the mortgage!

  • Finance with the right partner

    The portability is improved if all liquid funds are included in the income. To refinance the mortgage, some providers use less than five percent portability. Be sure to seek advice from an independent broker who is not interested in selling the products of a particular bank.

  • Check reverse mortgage

    After retirement, it affects quite a few mortgage borrowers: their mortgage is no longer affordable. Then the only thing left to do is to take a reverse mortgage. An example of this is the real estate rent, in which the property itself is set as security. With a reverse mortgage, the debt burden increases with each passing year, and the loan is repaid when the borrower dies or when the property is sold.
    To find the best offer for the mortgage, use our mortgage comparison! "}" Data-sheets-userformat = "{" 2 ": 15187," 3 ": {" 1 ": 0}," 4 ": {"1": 2, "2": 15395558}, "7": {"1": [{"1": 2, "2": 0, "5": {"1": 2, "2 ": 11775129}}, {" 1 ": 0," 2 ": 0," 3 ": 2}, {" 1 ": 1," 2 ": 0," 4 ": 1}]}," 9 ″: 0, “11 ″: 4,“ 12 ″: 0, “14”: {“1 ″: 2,“ 2 ″: 0}, “15 ″:“ \ “Helvetica Neue \“ “,“ 16 ″ : 10} “> But there are still only a few providers in Switzerland who offer the reverse mortgage model, and use is tied to various conditions. To find the best offer for the mortgage, use our mortgage comparison!

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Mortgage: What changes in tax terms?

Legal protection insurance in the event of damage

Mortgage: What changes in tax terms?

When a mortgage is taken out, there are many tax changes associated with it. The mortgage interest has a tax-reducing effect, but must also be mentioned in the tax return. Mortgage borrowers are advised to contact their tax advisor if they are unsure about the tax creditability of the mortgage.

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Home rental value for home ownership

Owners of houses or apartments must tax these properties at the federal and cantonal levels. What is important here is the so-called self-rental value, which is considered as notional income or is treated as such in the tax return.

This means that it is assumed that the owners have rented the property and thus have a source of income. The rental value will be between 60 and 70 percent of the market rent. This value is set by the tax authorities. Important: Check the assessment decision as soon as you have received it. These rulings are not always correct and you then pay more than you should.

You can save a lot of money by timely contesting and correcting the assessment decision.

These tax deductions are possible

Mortgage debtors can claim the interest on the tax, which means that they minimize taxable income. Depending on how high your mortgage is, offsetting may result in you paying significantly less tax.

From a purely tax point of view, it is therefore helpful if the mortgage is as high as possible, but you also have to take other points into account when deciding on the amount of the mortgage. In addition, the loan must also be sustainable. Important: You still have to be able to afford the mortgage if the general interest rate rises again and your loan becomes more expensive. 

Important: Low interest rates are great, but they also make you less tax deductible. Therefore, in phases of very low interest rates, the tax savings are very small and can almost be neglected.

In addition to the debt interest mentioned, you can also claim maintenance costs. This applies to each property and means that you have to pay less tax. Choose between a flat-rate deduction amount and the deduction of the actual costs that you actually incurred.

The lump-sum deduction is calculated from the rental value, from which ten percent is deducted. Compare this value to the actual cost. Tip: Always keep all receipts that can be assigned to the maintenance costs for the property so that you can meet your obligation to provide evidence. It also makes it easier for you to check which variant is better for you from a tax perspective.

Costs for the efficiency of the building can be deducted if they result in less energy being used in the building or if these measures help to protect the environment better. Otherwise, investments that preserve the value of the property may not be deducted. The distinction is not always easy. An example: you have the roof of the house newly covered.

If this is not necessary in terms of energy, you cannot deduct the costs. However, if you combine this work with better insulation of the roof and thus less energy loss when heating, the investment is tax deductible. The information sheets provided by the tax offices are helpful when classifying investments.

Tax saving model amortization?

The financial institutions always ask for an amortization, with which the mortgage on the property can be reduced to a maximum of 65 percent of the value of the property. This means that the first mortgage can only exist within 15 years (or until the age of 65). The second mortgage must then be paid off in full. The payment itself can be made either directly or indirectly:

Direct payback

In the case of direct amortization, the mortgage debtor regularly pays back his tranches, which are divided equally, to the creditors. Due to the regular payment of the loan debt, the interest burden is getting smaller, but this results in a growing tax burden. Tax deductions are falling. This means that the benefit of falling mortgage debt has a negative impact on the tax burden.

Many debtors certainly see a psychological benefit here, because when they see the huge mountain of debt gradually shrinking, that makes them optimistic. However, direct amortization also has disadvantages. As the mortgage debt decreases, the tax burden increases and interest rates decrease. This means that an ever smaller amount can be deducted from the tax return.

Last but not least, the amortization and payments into the 3a pillar of social security can become a financial burden.

Indirect payback

With this variant, the mortgage always remains the same. Payments are no longer transferred to the mortgage lender, but go to the Pillar 3A pension account. There they are saved. These deposits are tax deductible and can be deducted from income tax.

Those who receive the payments later on retirement only have to pay a reduced tax rate. This variant is good for all debtors who would otherwise not be able to build up a pension through the 3a pillar because they simply cannot afford it. Indirect amortization is particularly interesting for families if it is managed through a life insurance policy in pillar 3a and thus within the bounds of the pension plan.

If the policyholder dies, the mortgage is replaced by the sum insured. This means that indirect amortization covers the death of the policyholder if it is carried out through life insurance. However, price fluctuations can lead to losses in value.

Furthermore, the debt from the mortgage always remains the same, which is also a disadvantage of this procedure. But it also has advantages, because the mortgage interest has to be deducted longer from taxable income than with direct amortization.
If you want to find out more about mortgage interest rates, we recommend that you do the mortgage comparison or make such a comparison yourself. "}" Data-sheets-userformat = "{" 2 ": 1063763," 3 ": {" 1 ": 0 }, "4": {"1": 2, "2": 15395558}, "7": {"1": [{"1": 2, "2": 0, "5": {"1 ″: 2, “2”: 11775129}}, {“1 ″: 0,“ 2 ″: 0, “3”: 2}, {“1 ″: 1,“ 2 ″: 0, “4 ″: 1 }]}, “9 ″: 0,“ 11 ″: 4, “12 ″: 0,“ 14 ”: {“ 1 ″: 2, “2 ″: 0},“ 15 ″: “\“ Helvetica Neue \ "", "16": 10, "23": 1} "data-sheets-textstyleruns =" {"1": 0}? {"1": 201, "2": {"2": {"1 ″: 2, “2 ″: 1136076},“ 9 “: 1}}? {“ 1 ″: 220} “data-sheets-hyperlinkruns =“ {“1 ″: 201,“ 2 ″: “http: // neotralo.ch/de_ch/hypothekenvergleich/ «Genealogie" ": 220 signed"> The paid-in capital for the 3a pillar increases practically without further action because it earns interest. If you want to find out more about mortgage rates, we recommend the Mortgage comparison or to make such a comparison yourself.

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Home finance: How do I find the right mortgage?

Without private liability, it can be expensive

Home finance: How do I find the right mortgage?

The right mortgage has to fit like the proverbial fist on the eye. This means that the mortgage must match your needs exactly and should finance your dream of owning your own home safely. This secure financing is only possible if you have considered applying for the mortgage. In addition to choosing the right type of mortgage, it is important to find a good financing partner. Relevant comparisons are here at over the Mortgage comparison possible.

Without private liability, it can be expensive

How willing are you to take risks?

Find out what risk you are willing to take. The cheapest financing is not always the best idea, because it can also result in a financial fiasco due to further conditions. Determine what your maximum risk should be and define for yourself what constitutes a good mortgage.

No general statements can be made about this, because everyone sees in the? Good mortgage? something else. For some, it is very cheap, for others, interest rate negotiations can also be carried out over the entire term. Others see an advantage in the long fixed interest rate and like to commit themselves to up to 20 years. Ask yourself the following questions:

    1. What is my willingness to take risks?
    2. What risk can I take?
    3. Do I have enough liquid funds in an emergency to finance unforeseen things?
    4. How flexible do I have to stay?
    5. Do I want to keep my home forever or do I want to secure myself for a possible sale?
    6. Do both spouses share the risk or will only one partner be the mortgagee?

Other things can be derived from answering these questions. The question of the partner looks at a possible separation, because then the ownership of the property must be regulated. This goes hand in hand with the question of who then pays for the mortgage or whether both partners have equal rights here and can therefore be used by the bank for payment.

Last but not least, it is all about security and flexibility. If you now want to find the best mortgage for your home financing, first classify yourself in one of the following risk types:

    1. Mindful of security
      Those belonging to this group are characterized by their risk aversion. They want to commit themselves in the long term and prefer to secure the current interest rates rather than being confronted with higher interest rates later and unable to negotiate them. True to the motto: Better the sparrow in your hand than the pigeon on the roof!
    2. Risk is possible
      Risk takers follow the mortgage market and also like to run the risk that interest rates may change negatively for them. After all, the opposite is also possible and, due to a lack of fixed interest rates, the interest rates become lower.
    3. Sufficiently secured
      The liquid funds are sufficient to absorb a suddenly higher interest rate. These people are considered "risky" designated.
    4. Not enough money
      Those who are not at risk may face the question of whether they want to sell their property when interest rates rise. The reason is the lack of liquid funds for hedging.
    5. Sales possible at any time
      Mortgage borrowers who want to remain particularly flexible belong to this group. You may also want to be able to sell your home again and then need a mortgage to get out of.
    6. Home is inhabited in the long term
      These people do not need a lot of flexibility because they will live in their own home for as long as possible. A sale is not planned.

Different type combinations possible

You can choose between different types of mortgage. You can rely on a Libor mortgage and enjoy a certain flexibility and freedom, but at the same time the risk is greater. Financing through the fixed-rate mortgage is particularly secure, but then you are bound and no longer flexible for the duration of the term. 

The fixed-rate mortgage can have an exit option, which many borrowers don't even know. If you need to sell your property, this product provides an opportunity to get out of the mortgage. You retain the necessary flexibility, but on the other hand you are on the safe side.

The otherwise threatening prepayment interest, which can cost many thousands of Swiss francs, is significantly lower here. Before concluding the mortgage contract, ask your bank whether such an exit option is provided.

The Libor mortgage offers more flexibility, but at the same time involves certain risks. However, you can conclude a short-term framework contract here, which can reduce the risk of rising interest rates.

You then have the option of expiring the mortgage contract and selling your property. On the other hand, an extension of the mortgage is of course also possible, or it can be converted into a variable mortgage or a fixed-rate mortgage.

Fixed-rate mortgages with a short term are also possible. They are fixed for one or three years so that you can remain flexible and react to a reduction in interest rates. If you do not want to secure the currently low interest rates for too long, but rather react to the interest rate market, this variant is better than the fixed-rate mortgage with a fixed ten or even twenty years.

As always: evaluate yourself correctly and determine whether you prefer security or flexibility. The mix between the two is guaranteed by the Libor mortgage.

Use interest rate forecasts?

Interest rate forecasts are popular and often made, but they are rarely true. Even the biggest experts cannot estimate the market for the coming years and it is therefore clear that things always turn out differently than you think! Nevertheless, interest rate expectations are not unimportant and should be taken into account when choosing a mortgage strategy.

If interest rates are already expected to rise, the fixed-rate mortgage is the better choice. It does not have to be set at ten years, five years is often enough. Of course, this again depends on your risk awareness and the desire for security as well as on the financial reserves. 

Take note of the interest rate developments in recent years before you make a decision, but do not make your decision alone. In order to find the best mortgage for home financing, you need significantly more information and key points to make a decision. Therefore, take into account all the conditions offered for the mortgage contract.

Allocation to tranches?

Many banks recommend dividing the mortgage into tranches, whereby two tranches are sufficient for a value between CHF 250,000 and 600,000. The advantage: the entire mortgage is not due for renewal at once, so the disadvantages for you are lower in terms of interest. You can stay more flexible and react more easily to new interest rates.

But what many banks like to keep silent: If a tranche expires, you cannot simply switch to another bank, even if it is significantly cheaper than the previous one. The new bank rarely ranks second and lags behind other creditors. Banks also want to protect themselves and do not take this risk of default.

The financing can only be redeemed if all tranches are transferred to another bank within 24 months. The division into tranches can therefore mean that you literally surrender to your bank and cannot part with it again.

This procedure is understandable on the part of the bank, because you have to extend the contract even if the conditions deteriorate. However, this can become a trap for you.

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Take Out Mortgage: 7 Mistakes You Should Avoid

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Take Out Mortgage: 7 Mistakes You Should Avoid

Financing your own home is the most financially significant decision in your life for many people. It is important to note a few points here, because here too there are dangers and pitfalls. The following seven errors are particularly common.

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1. No strategy available

You should not only rely on advice from the banking expert, but also acquire some specialist knowledge yourself. Think about which strategy best suits you. Many prospective mortgage takers are far too blue-eyed, even though they are in debt for ten or twenty years by taking out a mortgage.

The right strategy is tailored to your life situation, taking into account your income and future wishes. Decide whether you would rather play it safe and choose the fixed-rate mortgage. Or whether you are not better off with a Libor mortgage because you can use it to regularly adjust the interest charge. You have to assess yourself whether you are the risk-averse or risk-taking type and choose the appropriate strategy accordingly.

2. Build on interest rate forecasts

Even though many experts advise paying attention to interest rate forecasts: these are only of limited help. It is not for nothing that the saying goes that it is particularly difficult to make predictions for the future. There is no evidence that any expert would have been able to predict interest rates over the past five years. 

Nevertheless, you should not ignore these developments completely, because if interest rates have been at a low level for some time, it can be assumed that they will soon move upwards. If you do not want to have anything permanently to do with interest rate changes, you should secure the current interest rates in the long term.

You run the risk of interest rates changing in the meantime, but should they go up, you're on the safe side.

3. No carving without consideration

Many banks suggest to their customers that they should split their mortgages into several tranches because that is to minimize risk. You are allegedly saved from having to renew the mortgage as a whole on bad terms; higher interest rates would then only affect one tranche.

However, carving carries a risk: it depends on the bank in question. You cannot choose another provider because others do not finance in second place. You would have to choose the offer from your previous bank for refinancing, even if it is significantly worse than the offers from other banks.

You are better off if you can amortize an expiring tranche. Confront your bank advisor with this request and you will be surprised at what good offers are on the table relatively quickly. If you reduce your fixed assets and thus reduce the mortgage, he will not be happy about it and will find other solutions.

4. Too tight a mortgage

Buying a house is associated with high costs, many of which are unpredictable. Builders are happy to forget about the additional costs and are suddenly there with a new house, but without a kitchen and new furniture. These purchases were not included in the mortgage calculation, and the money is now missing.

What to do? Increasing the mortgage is usually not easily possible. It is therefore better to think about how much money is actually needed right from the start. Do not restrict your liquidity too much and bet on a higher mortgage, even if this means a higher burden with more interest.

Financial freedom should not be underestimated and it is also worth repaying a mortgage for a few months longer. Experts recommend that after purchasing the property and after deducting further costs, approximately five percent of the cash reserves should still be available.

5. Forget termination

A fixed-rate mortgage usually has a fixed end date. But even then you have to cancel it! If you do not become active yourself, the expiring mortgage is converted into a variable mortgage; not all banks will contact you first.

The problem with this: The variable mortgage is significantly more expensive than the fixed-rate mortgage. In addition, you then no longer have the option to switch to another provider and you must comply with the set notice period for the variable mortgage.

So our advice: don't forget to write (and send!) The cancellation if you don't want any disadvantages. The comparison calculator on neotralo.ch can help you find a new provider for your mortgage.

6. Do not read the small print

The conversation with the consultant was extensive to exhaustive. Now sign the contract quickly and you have the mortgage in your pocket! But stop, it shouldn't be that fast. Don't forget to read the fine print as it can be your undoing. Regulations regarding the notice periods can be found here, furthermore individual conditions are explained in more detail or restrictions are shown.

Even if it has to be done quickly: Always read the small print and ask if something should be unclear.

7. Do not make comparisons

The offer appears good, the conditions favorable. However, please do not conclude the mortgage contract without making a comparison! Because the conclusion of the contract without negotiation or settlement can cost you dearly. There have already been cases in which the mortgagee could save up to CHF 20,000 because he has cleverly renegotiated.

If the bank makes you an offer for the mortgage, ask: What interest rate reductions are possible, can fees be waived? What about carving? If you have all this information from one bank, you should compare it with another bank.

Choose at least three other providers before you decide. Try to find out how much scope there is with the other offers. Only then decide with which bank you will implement your financing project.

To find other providers, use the Mortgage comparison on neotralo.ch and then get in touch with the advisors of the most interesting offers for you.

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Multi-tranche mortgage: advantages and disadvantages

Personal loan: An overview of the most important things

Multi-tranche mortgage: advantages and disadvantages

It can often be read that a mortgage should be divided into tranches. So-called splitting can ensure that the borrower does not have to extend the whole mortgage in one fell swoop. He would allegedly save money if the loan were extended at a time of particularly high interest rates. However, splitting is not always a good choice because it also has disadvantages. 

The division is not advised by some bankers below the mortgage amounts of CHF 250,000. Even if the property is going to be sold soon, splitting is not a good idea.

Personal loan: An overview of the most important things

The amount of the mortgage is relevant

The stated amount of the mortgage is important for deciding whether the loan should be split into tranches and if so, how many. Bankers recommend betting on two tranches if the loan amount is between CHF 250,000 and CHF 600,000. Higher amounts should be split into three tranches.

But not only the number of tranches is important, the average remaining term must also be kept in mind. If there are two mortgage tranches that run between two and six years, the average remaining term is four years.

With very low interest rates, most experts advise choosing an average remaining term of five years, so fixed-rate mortgages should have a term of at least seven years.

What problems can arise when the tranches are redeemed?

At best, all tranches expire within a period of twelve months, then the entire mortgage can be moved from one provider to the next. The transaction is smooth. However, it becomes more difficult if the endpoints of the tranches are more than twelve months away in the planned follow-up financing.

In this case it is difficult or even impossible to change the provider, the mortgage must be continued with the previous provider. Given the potentially high interest rates, this is not a desirable thing. The reason for this problem is that hardly any provider wants to take over individual tranches because the administrative effort involved is very large.

Debt notes must be split and promises to pay are changed. In addition, the risk for the individual institute is significantly higher because it would only take over the funding in second place. Hardly any bank will take this step, because if the borrower were unable to pay, all creditors would be served first. The necessary security for the bank is not given here.

Your chance to be able to transfer the tranches to a new provider at the same time is to synchronize them in good time. These should be extended in such a way that they expire as soon as possible or at most every twelve months. 

An example: The mortgage, which was once taken out for over CHF 800,000, is divided into two tranches. Both are of the same height and amount to CHF 400,000. However, the first tranche only runs for five years, the other twice as long. The first tranche must now be extended by five years so that both can be replaced after ten years. Financing is then easily possible through another provider. 

Tip: Plan the extension of the relevant tranche in good time and inform yourself about the further course of action about twelve months before the end of the financing. Here at neotralo.ch you will find valuable tips and find out which provider is ideal for your follow-up financing.

Advantages of mortgage splitting in tranches

The division into tranches makes sense for every borrower who wants to avoid having to extend the entire mortgage in one fell swoop. Experts therefore advise that the loan be divided into two tranches if the loan amount is more than CHF 250,000 but is still below CHF 600,000.

Various funding can be included in the planning. This includes, for example, early advances, gifts or paid life insurance. Caution: In the event of a divorce, the funds brought in must flow back or be credited to the partner who has contributed.

Disadvantages of dividing a mortgage into tranches

The disadvantages of carving are far more extensive than the number of advantages. The reason is the banks, which often struggle to finance a single tranche. If you have a tiered mortgage with one tranche expiring, you will hardly find another provider to take over the remaining tranche.

This provider would only be in second place and would have to resign behind all other demands. Hardly any bank takes this risk.

Another disadvantage is that the need to continue financing through the previous bank (because no other provider wanted to take over the open tranche) often means that unfavorable conditions have to be accepted. The previous bank is banking on the fact that you as the borrower have no other choice and have to accept the bad conditions. This is often associated with additional costs. 

A last disadvantage, which should be mentioned here in terms of carving, relates to the poor predictability. If the mortgage is renewed bit by bit depending on the end of the tranches, the planning security is less well given.

In addition, the total budget load fluctuates strongly, which is not always easy to compensate.
You can now take advantage of the mortgage comparison offers. It's worth it! "}" Data-sheets-userformat = "{" 2 ": 1063763," 3 ": {" 1 ": 0}," 4 ": {" 1 ": 2," 2 ": 15395558} , "7": {"1": [{"1": 2, "2": 0, "5": {"1": 2, "2": 11775129}}, {"1": 0, “2 ″: 0,“ 3 “: 2}, {“ 1 ″: 1, “2 ″: 0,“ 4 ″: 1}]}, “9 ″: 0,“ 11 ″: 4, “12 ″ : 0, “14”: {“1 ″: 2,“ 2 ″: 0}, “15 ″:“ \ “Helvetica Neue \“ “,“ 16 ″: 10, “23 ″: 1}“ data-sheets -textstyleruns = "{" 1 ": 0}? {" 1 ": 147," 2 ": {" 2 ": {" 1 ": 2," 2 ": 1136076}," 9 ": 1}}? {"1": 173} "data-sheets-hyperlinkruns =" {"1": 147, "2": "http://neotralo.ch/de_ch/hypothekenvergleich/"}? {"1": 173} " > A single mortgage that is not split into tranches is easier to plan. You can check out the mortgage offers right now Use mortgage comparison. Worth it!

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Mortgage: What Happens When Divorcing?

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Mortgage: What Happens When Divorcing?

Two out of five marriages end in divorce, many of them after about twenty years. Cynics could say that by then at least the home was paid off. But what about those who divorce before? What happens to the mortgage if the partners separate?

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Different ownership relationships have different consequences

A property can basically be bought as sole, joint or total property. Depending on the type of ownership, there are different consequences in the event of divorce:

    • Sole property

      The conditions are clear and easy to regulate if only one of the two spouses acquires the property. The buyer is entered in the land register, the spouse's name does not appear at all. So there are no problems with the regulations in the case of divorce. The buyer is solely responsible for the property, which applies to both the legal and the financial side. The divorce does not change the ownership of the property, the buyer remains the sole owner. However, it is up to the divorce judge to give the other partner a right to live. This is usually set for a limited period. If both spouses invested money in the property, they added value. The partner who is not the owner is entitled to half of this added value. The mortgage is usually only in the name of the owner of the property, so there are no problems with a divorce.

    • Co-owned real estate

      The value ratio determines to which parts the property belongs to whom. In the case of co-ownership, both partners own part of the property, whereby the value ratio is based on how much money each partner has contributed. Each partner has the right to freely dispose of his share, whereby the other partner must always be granted the right of first refusal. If one partner wishes to take over the part of the other partner in the event of a divorce, compensation must be paid to the latter. To do this, the market value of the property must be determined.

    • Total property

      When it comes to total ownership, the property belongs to both partners and they can only decide unanimously on how to proceed. Both spouses have an equal say. In the event of a divorce, they must therefore agree on how to proceed with the property; a mediator may have to be consulted.

The profit sharing

The agreed property regime is decisive for the further procedure in the event of a divorce. In the clear majority of cases (approx. 95 percent), the profit sharing applies, in which the added value described above must be shared fairly in the event of a divorce.

The participation in benefits applies automatically unless otherwise agreed upon in the marriage. In the event of a divorce, both spouses share half of their shared achievements, which relates not only to salary, interest and social security contributions, but also to the home they have bought.

But not only the credit is divided fairly, the debts must also be viewed in this way. This means that mortgage debts are also shared 50:50 in the profit sharing scheme. Furthermore, the principle of solidarity applies here: Both parties are liable for the debts, which applies regardless of the respective financial means.

In the event of a divorce, the bank can decide from whom it claims the credit installments and interest owed. Everyone has to stand up for the other.

And the portability calculation?

Anyone who has ever dealt with a mortgage knows the so-called portability regulation. This also plays a role in the case of a divorce, whereby the portability of a partner alone is usually no longer given. In Switzerland, every mortgagee can spend a maximum of one third of their gross household income on housing costs.

If the salary of an individual partner is chosen as the basis, this is much lower and the partner can usually not manage the loan rates alone. This means that he can no longer meet the portability requirements. In the worst case, the mortgage is canceled.

If the two partners find that they are no longer able to carry the mortgage, the question of possible dissolution may arise. But this can be expensive! As in other cases, the bank calculates prepayment interest based on the remaining term of the mortgage and the current interest rate.

This means that there is no precise amount that has to be included in the prepayment penalty. Rather, the penalty fees can vary. Some banks also charge another fee: the liquidation fee. This means that the penalty fees that are payable due to an early termination can amount to several tens of thousands of Swiss francs.

It is therefore advisable to look for other ways to cancel the mortgage. A good tip from the professional: If the property has to be sold, the buyer can take over the mortgage. However, this only applies if the bank also agrees and if the bank considers the buyer's creditworthiness to be sufficient.

Important tips in the event of a divorce

Ideally, the homeowners who still have a mortgage on their house will not divorce. However, because this cannot always be accomplished, precautions should be taken. The following tips will help limit the damage in the event of a divorce:

    • Short terms

      In general, long terms are ideal in view of low interest rates, which will almost certainly not decrease further, but rather will increase. But in the event of a divorce, long terms are very negative because nobody can get out of the contract. Therefore: Considering a possible divorce, short terms are a lot more sensible. The Libor mortgage is highly recommended, as it can only be concluded with a short term anyway. The risk of a forced termination of the mortgage due to lack of money in the event of a divorce is greatly reduced here.

    • Do not use pension funds

      Of course it is possible to finance the mortgage with funds from the pension fund. But if these funds were used when buying the property, they must be returned in the event of a divorce. This in turn means that you first need to have these cash.

    • Think before 

      This advice sounds easy, but is often neglected due to the great infatuation. It makes sense to make provisions when times are good and to worry about how things can go on later in the event of a divorce. Document all cash flows so that you can avoid any disputes later. Incidentally, this already applies to the purchase of the property, because even here it should be recorded where the money for the purchase comes from. Intermediate investments should also be precisely documented.
      To find the best offer for the mortgage, use our mortgage comparison! "}" Data-sheets-userformat = "{" 2 ": 1063763," 3 ": {" 1 ": 0}," 4 ": {" 1 ": 2," 2 ": 15395558}," 7 ": {" 1 ": [{" 1 ": 2," 2 ": 0," 5 ": {" 1 ": 2," 2 ": 11775129}}, {"1": 0, "2": 0, "3": 2}, {"1": 1, "2": 0, "4": 1}]}, "9": 0, “11 ″: 4,“ 12 ″: 0, “14”: {“1 ″: 2,“ 2 ″: 0}, “15 ″:“ \ “Helvetica Neue \“ “,“ 16 ″: 10 , "23": 1} "data-sheets-textstyleruns =" {"1": 0}? {"1": 228, "2": {"2": {"1": 2, "2": 1136076}, "9": 1}}? {"1": 255} "data-sheets-hyperlinkruns =" {"1": 228, "2": "http://neotralo.ch/de_ch/hypothekenvergleich/ “}? {“ 1 ″: 255} “> Intermediate investments should also be precisely documented. In the event of a divorce, it is then easier to understand where the money came from. To find the best deal on the mortgage, take advantage of it our mortgage comparison!

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Premature cancellation of the mortgage: This is how you can save

Personal loan and taxes: The most important things at a glance

Premature cancellation of the mortgage: This is how you can save

The most important thing is to keep an eye on the prepayment penalty when the mortgage is canceled or the planned cancellation. This is calculated from the interest that the bank has missed and the reinvestment interest. The greater the difference between the two, the more expensive it is to exit the current mortgage. Some banks even calculate risk margins, which probably offer the greatest savings potential. This is because they are completely unjustified because there is no longer any risk for the bank after the replacement.

Personal loan and taxes: The most important things at a glance

Save in various ways when repaying the mortgage

When concluding the mortgage contract, pay attention to how the costs for a prepayment penalty are calculated. This point is important when choosing the bank where the mortgage should be taken.

Negotiate well with the bank! If you have other products with the bank that runs your mortgage, they will be happy to accommodate you if you are planning to redeem them. Customers who have additional accounts or deposits with the bank are often offered lower exit rates.

Also good to know: Most cantons offer tax savings if you have to pay prepayment penalties. Include this in the tax return, it reduces the tax burden. Find out more from your canton or the canton administration.

The bank as a winner

Suppose you redeem your mortgage at the bank and the bank then deposits the money on the capital market. The market has since recovered and is now offering better interest rates. This means a profit for the bank because it now receives more interest than you would have received.

Wouldn't the bank have to pay you compensation because you quit? From a purely mathematical point of view, this may be true, but in reality no bank will do this. Nevertheless, you will at least benefit from a lower compensation payment. You cannot avoid it, because it is an important source of income for the bank.

But at least the payment is lower. It may therefore make sense for you to postpone the repayment of the mortgage at a time when interest rates are already rising. In any case, the bank will emerge from such a situation as a winner, but with a little skill you can at least make sure that the profit or loss is not quite as high.

The decision for a property is not always permanent. If you want to sell the mortgage-financed home again, you face an administrative problem. The easiest way for everyone involved is to transfer the mortgage to the new owner.

However, this requires the consent of the bank. It must agree to the transfer itself as well as to the creditworthiness of the new mortgagee.

Fixed mortgage vs. Libor mortgage

Taking out a fixed-rate mortgage protects you from rising interest rates and suddenly making your mortgage more expensive. But there is a catch, because you also do not benefit from falling interest rates.

If interest rates fall enormously on the money market, you pay a high price for the security of interest initially thought to be well-negotiated. If you want to get out of the mortgage contract, it will be expensive, as described above. It can therefore make sense not to rely on a fixed-rate mortgage at all, but rather? like so many other borrowers now too? to take the path with the Libor mortgage.

With this, the margin is fixed, the interest rate can adjust. Of course, it can also go up, this is the low risk that remains. You should consider a Libor mortgage at the latest when you are considering redeeming your existing mortgage.

You will then no longer save for the mortgage to be repaid, but at least for the future and the remaining amount to be financed. Of course, this also depends on how high the credit burden is and whether the slightly higher risk is worth it.

Taxes against interest

The prepayment penalty can reduce taxes, as we have already pointed out. So despite paying this penalty fee, it may still be worth paying off the mortgage early because the tax savings more than outweigh the additional costs.

The prepayment penalty is mentioned in the tax return where the normal debt interest is also to be listed. Important: The interest costs must not exceed CHF 50,000 a year.

Whether the early termination of the mortgage is worthwhile or not depends on the new conditions offered by the other bank. The tax aspect must also be taken into account. Contrast the cost of the replacement with the amount that you can save.

This gives you clarity and tells you exactly whether you can expect a positive result in the end or not. Make sure you use one to compare providers Mortgage comparison. Thus, within a few minutes you will find the cheapest provider with whom the replacement will probably be worthwhile.

Conclusion: worthwhile or not?

A mortgage can be redeemed, but it is not uncommon for a borrower to pay dearly. It is therefore advisable to get an idea of all costs involved in advance. Make a checklist of the costs and compare them with the savings.

These include the tax aspects as well as the expected interest. If there is a big difference and the costs outweigh, the replacement is not worth it. The individual measures are then insufficient to offset the fees.

To get around this, you should think about how long you want to stay with a provider before you sign the mortgage contract. Many banks offer lower interest rates on a ten-year fixed-rate mortgage than on a five-year mortgage.

This means that you run the risk of higher interest rates at the time the mortgage is updated, but at the same time the risk of a very high prepayment penalty is lower. Compare well and weigh what is important and right for you!

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What needs to be considered in the event of a replacement?

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What needs to be considered in the event of a replacement?

There are several reasons why a mortgagee chooses to redeem the mortgage. It is usually the case that there is no longer any satisfaction with the current provider or that the interest rates offered by other providers are significantly lower than those that have to be paid for themselves. The thought is quickly there: why not continue to finance at another bank? However, it is not always possible to redeem the mortgage, especially since this procedure can be very expensive, especially for a fixed-rate mortgage.

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Preliminary considerations for replacement

If a borrower brings up the question of repaying the mortgage, the bank advisor will quickly counter. He speaks of a high prepayment penalty, which is often more expensive than the possible savings from a lower interest rate at another bank. 

In addition, the collateral brought in can become a problem. Not all banks accept the same collateral and it may happen that the new bank does not accept it. It is therefore advisable to put the possibly new mortgage through its paces before the issue of early redemption is even raised. Therefore: Please inform first and then quit! Conversely, it is the wrong way.

The question also arises as to when it makes sense to repay a mortgage. Current interest rates play a key role in most cases. If they are significantly lower than with the current bank or with your own mortgage, the question of the replacement quickly arises. 

It is possible to benefit from high financial benefits if the mortgage is taken out with a cheaper bank. To make this possible, you should seek an offer from the bank at least three months before the expiry of your borrowing rate. This can be the current bank where the mortgage is taken anyway. 

But that can also be a completely different bank or an insurer. If you want to get an overview of the different providers and their conditions, use the comparison calculator on neotralo.ch. 

If the comparison banks offer better terms, early repayment of the mortgage can be worthwhile. But then calculate the prepayment penalty against it to find out what the actual savings will be.

When is the right time to redeem the mortgage?

Whether the mortgage repayment is the right way for you depends on the fixed interest rate on your previous loan. If the debit interest rate on your mortgage is still more than 24 months, repayment is usually not possible at all or only against payment of a high compensation payment to the bank. 

A fixed-rate mortgage that is 24 months before the end of the fixed rate period can, however, already be replaced at some banks. The mortgage with the new bank should then be taken out immediately to ensure that the loan is repaid. However, the transferring bank requires an interest surcharge. 

The reason: you secure the current interest rates, which theoretically can increase in the next 24 months. This would mean a loss for the releasing bank. To protect yourself from this, a forward loan is usually associated with an interest premium. The premium is higher the further in advance the loan is taken out. Some banks only offer this type of financing for a maximum of twelve months in advance.

Follow these steps for early replacement

First you should come across various offers a mortgage comparison for a mortgage get what's here about neotralo.chis very simple. Compare these offers and decide on four to five providers that are closer to the selection. Then submit a specific financing request to the bank of your choice. So the steps to the replacement must be: Compare, contact, conclude!

Note the prepayment penalty already mentioned. This is calculated as a percentage of the outstanding mortgage amount. This means that compensation payments can amount to many thousands of Swiss francs. 

Payments of CHF 40,000 or more are not uncommon. Therefore, calculate well whether the replacement is worthwhile, because you have to be able to save at least this sum, or even more, by switching. How high your savings will be depends on the outstanding amount of the loan, where the interest must be significantly lower than before due to a bank change. 

If the prepayment fee exceeds the possible interest savings, a redemption is not recommended, because the savings would practically be eaten up. Usual rates for early repayment penalties are, for example, 0.70 percent for fixed-rate mortgages with a term of 10 years, Libor mortgages are often still calculated at least 0.60 percent. 

So carefully consider whether the replacement is worthwhile for you. Even with a? Zero round? the switch is not worth it unless you benefit from further advantages and better conditions (e.g. a shorter notice period).

When is early redemption worthwhile?

Please note the aforementioned aspects and inform yourself about the possible prepayment penalty. How much this depends on the remaining term of your mortgage as well as on the interest that you are currently paying and that you would have to pay in a new loan. 

Experts believe that the redemption is only worthwhile if an interest rate differential of at least 1.5 percentage points is reached and if the remaining term of the mortgage is at least twelve months. But even then you should compare the providers well and not use the apparently cheapest offer. 

The associated conditions can be a disadvantage for you, so you should take a close look. Use our comparison calculator here on neotralo.ch to find the currently best provider for you and request a specific offer. Also consider a possible increase in the repayment amount in order to be able to repay the mortgage more quickly. 

In any case, however, the following applies: early redemption is never free and needs to be carefully considered. The offers in this regard often seem very lucrative, but on closer inspection they turn out to be significantly less good than expected. Therefore: Please do not change prematurely and take all possible costs into account!

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