Is your old mortgage about to expire, so you need a new one? Or are you not satisfied with your current provider and are considering terminating your contract early? Find out everything you need to know when switching here.
Renewing your financing becomes relevant in the following situations:
Would you like to renew an expiring mortgage, switch from a fixed-rate mortgage to a Saron mortgage (or vice versa) or terminate your current mortgage contract early? Use our checklist to find out what documents you need to apply for a mortgage.
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 six months before your current mortgage runs out. This will allow you to do some research. Don’t make any rash decisions – but don’t leave it so long that you run out of wiggle room, either.
Look closely at your current mortgage contracts and the cancellation conditions with a PostFinance financial 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.
Some providers will allow you to cancel your mortgage before the end of the term. In this case, you may have to pay an early repayment penalty to compensate your old provider for expenses such as the lost interest payments. 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.
Calculate carefully whether the savings from the more favourable terms are higher than the early repayment penalty. Depending on how the interest rate environment has developed since you took out your mortgage, this can be very high and can amount to several tens of thousands of francs.
Anyone making this calculation should also check for a possible tax deduction of the early repayment penalty. A 2019 Federal Court ruling set out the following principles in this regard:
Tip: not all cantons adhere to this rule, which means that affected taxpayers have to fight for their rights in an arduous appeals process. That is why it is best to obtain written confirmation from your tax authority that your costs are deductible.
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:
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.
Think about your current mortgage model based on your current personal circumstances. Which term is most suitable? And do you prefer a fixed-rate mortgage or a Saron mortgage? Is your current mortgage model still suitable?
Also consider the option of a forward mortgage, which allows you to secure an interest rate with PostFinance up to 18 months in advance. This can be an attractive alternative, especially when interest rates are rising.
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.
When comparing deals, don’t just look at the interest rate, but also at the overall package. Another key factor 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 situations, such as any financial constraints you may experience at a later point.
An overview of the most important points to consider when renewing your mortgage.
It means that you replace real estate financing for which the contractually agreed term ends with a new mortgage. Renewal is a good opportunity to check the offers on the market and switch providers.
Yes, that is possible. However, the lender may then have to pay “compensation” – known as a prepayment penalty. This can turn out to be very high. Ask your current lender to calculate the early repayment penalty.
Exiting early should be considered carefully, and the costs should be calculated carefully. In some cases, it may be more advantageous to wait until your contract expires. However, it can still be worthwhile.
Start thinking about renewing your mortgage at least six months before it expires. Check whether your contract or the General Terms and Conditions (GTC) include a cancellation period. Ask yourself which mortgage model and term is right for you. If you are considering early repayment, you should consider carefully whether the early repayment penalty outweighs the potential savings. It is best to seek expert advice. PostFinance’s financing experts will personally answer your questions about renewing your current mortgage.
When selling a property, the mortgage contract must always be cancelled and the early repayment penalty paid. It may also be possible to transfer the mortgage to the new property. The preconditions for this are:
In some cases, the buyer, i.e. the new owner of the property, can also take over the current financing. The preconditions for this are:
