Early repayment charge for ending your mortgage early
There are many reasons to end your mortgage ahead of time. In this case, however, the bank will usually apply an early repayment charge. Comparis explains what an early repayment charge is, how it is calculated and when it is waived.
21.10.2025
iStock / AlexRaths
1. What is an early repayment charge in terms of mortgages?
If you decide to repay in full your fixed-rate or Saron mortgage earlier than agreed, mortgage institutes will require you to pay an early repayment charge.
The reason for this is that the mortgage institute invests the repaid mortgage amount on the capital market for the residual term. If it generates a lower profit than the interest on the mortgage, it makes a loss. The mortgage institute passes this loss onto the customer in the form of an early repayment charge.
2. How much is the early repayment charge on a mortgage?
The amount of the early repayment charge depends on the residual term and the interest rate applied. There may also be processing fees.
As a starting point, the mortgage institute usually uses the interest rate it would have received for the residual term of the mortgage. From this, it deducts the amount that it could obtain by investing the mortgage balance in the capital market. The calculation method varies significantly depending on the lender, however.
The exact conditions relating to the early prepayment charge are set out in the general terms and conditions of the framework agreement. Don't forget to read the small print. Most banks will charge you for any loss of interest, but will not repay any interest gains to you.
Example of how an early repayment charge is calculated:
The table shows a fictitious calculation example for a 15-year fixed-rate mortgage that is ended prematurely after five years. The original mortgage amounted to 750,000 francs.
| Mortgage amount | CHF 750,000 |
|---|---|
| Mortgage interest rate | 1.5% |
| Interest rate of reinvestment in the capital market | 1.0% |
| Difference per year | 0.5% |
| Early repayment charger per year | CHF 3,750 |
| Total early repayment charge | CHF 37,500 |
Can I calculate the early repayment charge myself?
Calculating a potential early repayment charge yourself can be difficult. The reason for this is that mortgage institutes do not usually disclose the interest rate applied for the reinvestment of the mortgage balance.
Contact your lender and ask them to calculate what costs you would incur. This way, you’ll be on the safe side.
3. When does a bank waive an early repayment charge?
The early repayment charge may be waived if you are buying or selling a property. Specifically, this applies in the following cases:
Transferring the mortgage to the new property: if you buy a new home, you can transfer your existing mortgage to it. If you own another property, you can also transfer your mortgage to that one instead.
Transferring the mortgage to the new owner: your buyer may be interested in taking over your mortgage. However, it is highly unlikely that a buyer will agree to pay the interest rate for this mortgage if a new mortgage is cheaper. If this is the case, it is worth paying the buyer the difference in interest so that they will agree to take over your mortgage. You also have the option of reducing the asking price.
Important: both options require the lender's consent. In addition, a new credit check is usually carried out.
4. When is it worth repaying a mortgage early?
Would you like to take out a mortgage with a lower interest rate and repay the old mortgage earlier than contractually agreed? If so, you should take a close look at the figures. The interest you save must be more than the early repayment charge.
Good to know
Are you staying with the same mortgage institute? The institute has an interest in accommodating you. Make it clear that you are enquiring about refinancing your mortgage.
Negotiating with a range of financial institutes takes a great deal of time and effort. If you are put off by the work involved or are not confident in negotiating, you can contact specialists – for example at HypoPlus, Comparis’ mortgage partner.
5. Early repayment charge for repaying your mortgage early: frequently asked questions
The amount of the early repayment charge varies from one mortgage institute to another. Important factors for the calculation are:
the mortgage amount
the difference between the contractually agreed mortgage interest rate and the currently achievable interest rate when investing on the capital market
the residual term of the mortgage
Mortgage institutes also generally charge administration and processing fees. The exact conditions relating to the early repayment charge are set out in the general terms and conditions of the framework agreement.
If you are selling the property, you can include the early repayment charge in the investment costs relating to property gains tax. This reduces the taxable profit earned from the sale.
If you end your mortgage early in order to switch to a different mortgage model with the same mortgage institute, you can deduct the exit fees from your taxable income on your tax return. Further information on this topic is available in the article on mortgages and tax returns.
There is no statutory upper limit for the early repayment charge in Switzerland. Mortgage institutes are relatively free to calculate it as they wish, but must base it on the actual financial loss.
Good to know
If you feel that the cost of refinancing your mortgage is excessive and negotiations have failed, you are advised to consult the bank's arbitration service. You can also contact the Swiss Banking Ombudsman, if necessary.
Yes, the early repayment charge is generally negotiable. You have a particularly good chance of gaining a reduction if you
take out a new mortgage with the same mortgage institute or
if there are special circumstances (e.g. serious illness or incapacity to work).
The willingness to do this varies from one mortgage institute to another and depends on the basis for negotiations.
This article was first published on 08.06.2018
