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!
