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Old 16.03.2012, 10:42
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Closing a mortgage 2 years upfront

Hi,

Does anyone know of a Swiss bank that is willing to close a mortgage 2 years upfront against current rates? I know BCGE does so, but like to find a few more ...

Thanks!
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Old 16.03.2012, 11:14
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Re: Closing a mortgage 2 years upfront

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Hi,

Does anyone know of a Swiss bank that is willing to close a mortgage 2 years upfront against current rates? I know BCGE does so, but like to find a few more ...

Thanks!
Not sure what you mean? Can you explain?
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Old 16.03.2012, 11:25
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Re: Closing a mortgage 2 years upfront

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Not sure what you mean? Can you explain?
The mortgage is not needed now, but in two years.
But the OP wants to profit from the low interest rates available now.

Unless you already have a piece of land that you want to start building on in two years, I don't see much use for such a long delay.
Especially, as most likely, you can't just walk away from the contract in two years if you change your mind or circumstances change...
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Old 16.03.2012, 11:38
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Re: Closing a mortgage 2 years upfront

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The mortgage is not needed now, but in two years.
But the OP wants to profit from the low interest rates available now.

Unless you already have a piece of land that you want to start building on in two years, I don't see much use for such a long delay.
Especially, as most likely, you can't just walk away from the contract in two years if you change your mind or circumstances change...
Then I don't think its possible to sign up for a mortgage in advance unless you actually have the property or the land - the bank need to know the asset that they are valuing. And unless you actually have title to it, they would be committing capital to you against something you don't own.

We have just signed up this week to a 5 year mortgage at a good rate (I think) for October this year (so 6 months in advance) but we already own the property and this is just a balance payment
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Old 16.03.2012, 14:00
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Re: Closing a mortgage 2 years upfront

I assume it is a refinancing of a current deal. I think it is a smart move. In my experience (from DE not CHF) banks do it, but charge to move you out along the curve. In my experience the charges are quite empirical though and you would get a worse rate even if the 1*6 fwd rate was lower than the actual spot rate!

Another option is to try and hedge the exposure. The problem is you may find a product allowing you to effectively hedge the rates exposure, but there is nothing available to hedge the credit spread. Still the rates are what we are more worried about here. You might want to have a look at

http://www.payoff.ch/ and look at a longer dated call warrant on the swiss 5yr swap or similar.
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Old 16.03.2012, 14:02
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Re: Closing a mortgage 2 years upfront

I recently re-financed my mortgage. I had the option of signing up for the rates as they were when I talked to my bank, or waiting until the month before the previous mortgage contract ended. If I'd taken the first option, then a premium would be added to cover the additional risk.

That was two/three months in advance. For two years, doubt it would be worth it!
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Old 16.03.2012, 14:36
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Re: Closing a mortgage 2 years upfront

I don't know if you can go all the way out to two years. But when we bought, we locked in foward for I think it was 3 months.

We are with CS

But as said, you will probably need to be the owner of land / have a signed purchase contract etc.
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Old 16.03.2012, 16:40
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Re: Closing a mortgage 2 years upfront

you can trade interest rate instruments to achieve this. UBS have them.
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Old 17.03.2012, 08:34
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Re: Closing a mortgage 2 years upfront

Hi - I should have been more specific, it indeed concerns refinancing of a current mortgage. I was more or less forced to close a bad deal 3 years back at highest rate (3.99%) and have been losing quite lot of money. With forcasts saying that current all time low rates will rise significantly in the next 12 months I am looking for a bank willing to fix rate 2 years before expiry of my current 5 year deal... thanks Shove, will check that website out. Any other tips welcome.
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Old 17.03.2012, 08:45
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Re: Closing a mortgage 2 years upfront

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Hi - I should have been more specific, it indeed concerns refinancing of a current mortgage. I was more or less forced to close a bad deal 3 years back at highest rate (3.99%) and have been losing quite lot of money. With forcasts saying that current all time low rates will rise significantly in the next 12 months I am looking for a bank willing to fix rate 2 years before expiry of my current 5 year deal... thanks Shove, will check that website out. Any other tips welcome.
Good luck with it and let us know what happens. Seems surprising to me that a bank will let you out of a current commitment when they will have borrowed the money at those rates, so not sure why it would be in their interest (no pun intended) to let you out of it. I suppose the best you could hope for is a "blended rate" of the remainder of your current deal and the new extension deal - smoothed to equal rates over the whole period.

By the way, how is one "forced" to take a bad rate? Surely you just take the best rates available at that time, no?
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Old 17.03.2012, 12:29
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Re: Closing a mortgage 2 years upfront

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With forcasts saying that current all time low rates will rise significantly in the next 12 months
what forecasts, do you have a link?

thanks
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Old 17.03.2012, 14:04
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Re: Closing a mortgage 2 years upfront

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... I was more or less forced to close a bad deal 3 years back at highest rate (3.99%) ...
Five years ago, I opted for a standard variable rate mortgage, and was quids in over those who took the fixed rate option.

You could have done the same, couldn't you?
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Old 17.03.2012, 16:33
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Re: Closing a mortgage 2 years upfront

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Five years ago, I opted for a standard variable rate mortgage, and was quids in over those who took the fixed rate option.

You could have done the same, couldn't you?
The OP is risk averse, & paid the price for security.
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Old 17.03.2012, 18:39
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Re: Closing a mortgage 2 years upfront

I've got a fixed rate now though. That was a no brainer.
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Old 20.03.2012, 21:31
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Re: Closing a mortgage 2 years upfront

@gva: here is the link:

https://www.credit-suisse.com/ch/pri...ognosen_en.pdf

I attached this doc as well.


@Caviarchips: I basically lost my job at a very inconvenient moment, ended up in a tricky situation with the old property not yet being sold etc. and had to close the deal with my bank quickly, it sort of felt forced...
Attached Files
File Type: pdf hypo_prognosen_en.pdf (140.7 KB, 153 views)
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Old 09.01.2013, 15:26
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Re: Closing a mortgage 2 years upfront

Anyone any idea what the banks charge when you sell the house half way through an 8 year mortgage? You pay off the money which you borrowed, but do they charge you some penalty for getting out 4 years early?

Surely, you do not have to keep paying the interest for 4 more years as they have their money back?

Quite important as I have just had an offer on my house.
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Old 09.01.2013, 15:27
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Re: Closing a mortgage 2 years upfront

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Anyone any idea what the banks charge when you sell the house half way through an 8 year mortgage? You pay off the money which you borrowed, but do they charge you some penalty for getting out 4 years early?

Surely, you do not have to keep paying the interest for 4 more years as they have their money back?

Quite important as I have just had an offer on my house.
ask your lender. Worst case is a penalty on the remaining contracted duration of the mortgage.

I'm not sure but some don't charge early exit if you're selling. Also if you're buying again and use the same lender, you can negotiate.
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Old 09.01.2013, 16:54
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Re: Closing a mortgage 2 years upfront

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Anyone any idea what the banks charge when you sell the house half way through an 8 year mortgage? You pay off the money which you borrowed, but do they charge you some penalty for getting out 4 years early?

Surely, you do not have to keep paying the interest for 4 more years as they have their money back?

Quite important as I have just had an offer on my house.
Yes. From what I understand most contracts state that you will pay off the outstanding interest for the remainder of the loan as "penalty", unless you negotiated that out or less or something. But you'll have to go back and check. Although when you say "keep paying", that's implies that you can pay this penalty over time. That is not the case. You need to pay the penalty at the termination of the mortgage contract.

If you buy a new place you can take that mortgage with you to the new property. You can also ask the purchaser if they want to take over your mortgage. If you have a better rate they will likely agree. Considering rates today are lower than 6 years ago, I'm guessing that could be a hard sell.

Sometimes though if you have a property that has lots of buyers competing to buy the house it's easier to make the new buyer take up your mortgage.

Anyway, check your contract and try negotiation with your lender.
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Old 09.01.2013, 17:10
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Re: Closing a mortgage 2 years upfront

This is not good news. I was just going to rent an apartment due to illness.
The 8 year was just an example. Half of my mortgage is 5 years - which has a year left, the other is 8 years, which runs out in 4 years.
I just received the offer today, so I will contact the bank tomorrow and see what the best option is.

My idea was to downsize and just rent a small appartment. Maybe it would be better to just buy a small appartment and get my 2 mortgages in sync, then sell 6 months before the end of the 8 year mortgage.
mmm - not what I wanted to hear.

Thanks for the info.
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Old 09.01.2013, 18:14
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Re: Closing a mortgage 2 years upfront

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This is not good news. I was just going to rent an apartment due to illness.
The 8 year was just an example. Half of my mortgage is 5 years - which has a year left, the other is 8 years, which runs out in 4 years.
I just received the offer today, so I will contact the bank tomorrow and see what the best option is.

My idea was to downsize and just rent a small appartment. Maybe it would be better to just buy a small appartment and get my 2 mortgages in sync, then sell 6 months before the end of the 8 year mortgage.
mmm - not what I wanted to hear.

Thanks for the info.
You'll need to work it out with your bank. I don't know how good a negotiator you are, I know I'm crap at it!

But yes, you're probably better off buying a small apt with the "left over". Anyway, that should probably be less expensive than renting anyway.

Good luck and take care!
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