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Old 16.04.2014, 17:25
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Mortgage question

Dear Finance expert,

We are planing to take a mortgage. We are planning to buy an apartment which is under construction and will be delivered after 9 months.

My first question is views on interest rates movement in next 9 months. My personal view is that they are very likely going to go up as the growth is returning to US and Euro Zone. What are the expert view on this?

As we know current interest rates are relatively low but as the apartment is delivered later, the mortgage kicks-on after 9 months. I want to hedge my risk of rising interest rate. Is it possible to do a hedge? I am surely talking to my potential bank on this but any feedback on this will be highly appreciated.

Thanks
Han
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Old 16.04.2014, 17:33
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Re: Mortgage question

Hi, this organisation gives very good advice about all finance matters including mortgages and their charges are very reasonable:

www.vermoegenszentrum.ch

I really recommend them and good luck!
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Old 16.04.2014, 17:58
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Re: Mortgage question

Hi
at most banks it is possible to hedge the mortgage over these 9 months. Costs are a few basis points, maybe 20 or so.
Regards
Andy
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Old 21.04.2014, 22:32
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Re: Mortgage question

Hi,


I can also really recommend to go to the Vermögenszentrum, they provide independent advice on mortgages. To put it very directly and despite any bank's niceties and giving you the idea the bank is looking after your interests, the reality is any bank will first and foremost look after its own interests.


This will probably mean the bank will advise you fixed-term mortgages with medium duration (4-5-6 years) and it turns out these are the mortgages where the bank makes the biggest margin on. Or they sell based on your fear that interest rates will raise ("rates are historically low, they can really only go up") you fixed mortgages with a longer term (7-8-9-10 years) which means you'll be locked to that bank for a long time. If you want to or ever need to sell your property and cancel the mortgage, you'll be in for a hefty penalty as I found out the hard way. (just google: Vorfälligkeitsentschädigung - it will be in the small print of any mortgage contract). To avoid this, talk to an expert independent financial advisor (not easy to find). There's a lot more to it than just "shopping around for the lowest rate" and making some appointments at banks.

A few sites provide on-line comparison of rates, a very good one is from VermoegensPartner (http://www.vermoegens-partner.ch/de/...en-hypotheken/). Be aware that only the Migros Bank publishes on the internet its Best-and-Final-Offer rates. The other banks/providers offer "Schaufensterzinsen", i.e. shop-window rates, meaning they are negotiable a (little) bit, depending on your particular credit worthiness (income, capital, employment, etc) and the particular object you want to buy (location, minergie, neubau, etc).


Either way, to answer your question: in Swiss mortgage language it's called a Forward-Aufschlag, and for 9 months it's indeed approx. 0.2% on top of the current rates. For example at Swissquote, the premium for fixing a mortgage nine months in advance is 0.2% (http://www.swissquote.ch/sqw-static/...geRates.action) .
Talk to some mortgage experts though if such an insurance makes sense.


Good luck with finding your best mortgage, and don't be fooled by any bank who -at face value- seem to represent your best interest.


PS: Both Ktipp Geld and Bilanz magazine had recently very good articles on mortgages (in German)!
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Old 27.07.2016, 17:54
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Re: Mortgage question

Does anyone know if the banks will lend the approximately 5% required notary and transfer fees in Canton Vaud?
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Old 27.07.2016, 18:01
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Re: Mortgage question

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Does anyone know if the banks will lend the approximately 5% required notary and transfer fees in Canton Vaud?
If they were strict on 20% downpayment, then no. But I've heard they sometimes accept less that 20%.
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