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.
