What to consider when renewing your mortgage

Renewing a mortgage


It’s been a while since you took out your mortgage and you're now looking to renew it? comparis.ch explains what to watch out for.

A step-by-step guide to renewing your mortgage

  1. Choose the right time to renew.
  2. Check the latest interest rates offered by mortgage lenders (compare lenders).
  3. Request quotes from the lenders of your choice (ideally on the same day to ensure comparability) or ask our partner service HypoPlus to request them for you free of charge to save you time. 
  4. The lenders send you their quotes.
  5. You decide on a lender and terminate your old mortgage (if necessary).
  6. The new agreement is signed.
  7. The new lender requests the redemption statement from your previous lender.
  8. Once the redemption statement has been received, the new lender provides the funds and the remortgage is complete.

Don't worry if you are uncomfortable comparing deals and negotiating with lenders, or are not sure which lender offers the product you're looking for.  You're not alone! Working with over 50 banks, insurance companies, pension funds and investment funds, HypoPlus can take care of the comparing and negotiating for you. Thanks to long-standing partnerships with lenders, the partner service of comparis.ch can negotiate the best conditions and find the right mortgage deal for you. 

 

Choose the right time

Whether you are extending your mortgage or switching to a different provider, your options depend on how much time remains on your deal:

Your mortgage expires in the next 6 months

The first thing to do is to check whether your mortgage agreement stipulates a period of notice. Nowadays, even many fixed-rate mortgages require you to give notice to terminate them, otherwise the mortgage automatically switches to a variable-rate mortgage, which at the moment is usually more expensive. Some lenders require you to give as much as 6 months’ notice.

If you give notice on time, you can easily refinance your mortgage and if you wish, switch to a different lender. HypoPlus, a partner service of comparis.ch, will be pleased to help you compare products and negotiate a deal, making it easier for you to find the right mortgage.

Compare mortgages

Your mortgage expires in the next 7-12 months

If your mortgage ends in 7-12 months’ time, you can renew it now, even with a different lender, providing you give the required notice. This doesn't necessitate terminating your mortgage early.

Lenders usually require you to pay a fee (or forward surcharge) to secure your mortgage in advance. This type of mortgage is often referred to as a “forward mortgage”. The forward surcharge is set by the lender based on how early the mortgage agreement is concluded and how long the repayment term is. The fees charged by the lenders vary considerably – some require 0.2-0.5 per cent for a mortgage concluded one year in advance, while others don't charge anything at all.

Compare forward mortgages

Your mortgage expires in more than 12 months’ time

If you have more than one year left on your mortgage, you can only end your agreement by redeeming the mortgage early. In this case, you will need to pay the lender an early repayment charge, as the mortgage agreement is binding. However, this may still be worth doing. You need to compare the savings you expect to make with the early repayment charge and work out what saves you the most money.

Your mortgage is split into multiple tranches with different repayment terms

If your mortgage is divided into multiple tranches, you need to check how much time remains on each repayment term. Read more on this subject in the article “Splitting your mortgage – what you need to know”.

 

Compare the products of different lenders

Your current mortgage provider will be pleased to make you a new offer. If your experience with your bank has been good, you may not even want to change. Given the level of interest rates at the moment, the new conditions are more than likely to be better than those of your current mortgage. 

Mortgage Guide – tips on all aspects of mortgages

But don’t just blindly accept the first offer you receive from your lender. Request quotes from other lenders (ideally on the same day to ensure that they are comparable), compare them and negotiate with your current lender. And give other banks and insurance companies the chance to win you as a customer. It will definitely be worth your while. Compare the benchmark rates of different lenders here.

If you are unsure which lender to choose, or would be grateful for some help with negotiating, our partner service HypoPlus would be pleased to be of assistance. HypoPlus maintains a network of over 50 lenders and its mortgage experts will negotiate the best deals for you free of charge.

 

 

Don't miss the termination deadline

Some lenders automatically convert their mortgages to an expensive variable-rate mortgage at the end of the term. To avoid this, you are advised to look into either extending the term or terminating your mortgage in good time. Details of notice periods can be found in your mortgage agreement. Usually, the notice period is between three and six months. To be on the safe side, comparis.ch can also send you a termination reminder.

We also recommend that you don't wait until your lender contacts you with an offer to extend. Be proactive and consult your mortgage adviser so that you have time to compare the deal with other offers.

Make sure you are informed

Even if you have a good understanding of the topic of mortgages, you should still address the following questions: Have there been any changes to my risk level or personal circumstances? Will this affect my long-term plans, tax situation or retirement? The better informed you are, the better your mortgage will suit your personal situation in the long term.

Secure interest rates in advance

You also have the option of fixing the conditions up to 12 months in advance. This scenario is more expensive as you will be charged a fee for this. This type of mortgage is referred to as a forward mortgage. If interest rates increase, such a hedging solution may definitely pay off, although fixing the mortgage more than 12 months in advance does not usually make sense because of the high additional fee.

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Let us remind you of when you need to give notice on your current mortgage.

Termination reminder


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