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Created on 28.05.2020

Switching mortgage is well worth thinking about

Do you own your own home and have a mortgage that is due to expire in the next few months? Finding the perfect new mortgage deal requires some planning and thought. You should consider the following questions.

Do you want to replace your mortgage and switch to a new provider on the expiry day or even before? Following our key pointers will help you find the ideal new solution. Simply sticking with your current deal is not always the best option.

Getting the timing right: when is the best time to switch?

Timing is a crucial factor when switching mortgage. Don’t wait too long, but don’t be too hasty, either. After all, who knows how things will turn out with your personal situation or on the market over the long term? We advise getting started 18 months to a year in advance, but no later than three months before your current mortgage runs out. This will allow you to do some research and look for the best deals. Don’t make any rash decisions – but don’t leave it so long that you run out of wiggle room, either. 

Tip

Look closely at your current mortgage deal and the cancellation conditions – perhaps with an advisor. It may well be the case, for example, that a fixed expiry date has been set, but you still have to cancel the mortgage to prevent automatic renewal. 

Useful to know

Some providers will allow you to cancel your mortgage before the end of the term. A prepayment penalty may then apply. As a general rule, it is not worth cancelling a mortgage prematurely unless the savings from the new deal outweigh the costs of early termination.

Compile the documents required for the mortgage decision: what information do I need to have available?

Keep the key information about your property together in a folder. This can then be submitted at a later stage to a financing partner, who can use it as the basis for a mortgage decision. The folder should contain the following details:

  • High-quality photos of the property
  • List of renovation work carried out
  • Tax return
  • Building insurance certificate for single-family homes
  • Floor plans with square metreage for apartments

Tip

Would you like to know what your property is worth? With the PostFinance Homecheck App, you can take photos of your property and get an immediate estimated valuation.

Consider your personal circumstances: what are your future plans?

When deciding which is the best mortgage deal for your property, it’s a good idea to consider your current personal circumstances and future plans. Perhaps you’d like to start a family soon, are coming up to retirement or are going through a divorce. A long-term mortgage at the lowest interest rate is not always the best option. Look at the alternatives carefully and perhaps consider taking out only part of the mortgage on a long-term basis. Switching provider may also be an opportunity to pay off part of the mortgage. 

Look at your current model: should you find a better solution?

Think about your existing mortgage model based on your current personal circumstances. Which term is most suitable? Should you take out a fixed-rate or LIBOR mortgage? Is your existing mortgage model still suitable?

Tip

Have you so far divided your mortgage into various tranches with different terms, to reduce the risk of repayment falling on an unfavourable due date? If the terms are over 18 months apart, this kind of tranche solution can have the disadvantage that switching to another financing partner is difficult. This is because individual tranches often cannot be transferred. Switching a mortgage may be good reason to abandon the tranche model and look for a new solution with your future financing partner. 

Comparing deals: how can I get a good overall package?

When comparing deals, don’t just look at the interest rate, but also at the overall package. Check, for example, whether there are hidden fees when extending a mortgage or what the terms of cancellation are. Another key factor when switching mortgage is the trust you have in your new financing partner. A trusted partner with whom you may also have other business relationships can be a good option, especially in difficult times, such as any financial constraints you may experience at a later point. 

Decide on your personal preference: how do you want to take out your mortgage?

Do you want to take out a replacement mortgage directly online? Or would you prefer to arrange a personal consultation to clear up any unresolved issues in person? How you wish to take out your mortgage is a matter of personal preference. 

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