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Old 02.09.2020, 23:04
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Bank wants to charge negative rates to break mortgage!

So I had a misfortune of refinancing my fix mortgage for a few more years than I actually needed in hindsight. Due to personal circumstances I have to sell my property now, cancel the mortgage and face the infamous Vorfälligkeitsentschädigung.

Asked my account manager to compute it and here's the problem: the bank wants way more than the sum of all interests I would have to pay normally during the remaining years! About 0.4-0.5% more per year!

Looks like they are selling mortgages on the market now, collecting negative interest rates on swiss francs from the public market plus positive interests from homeowners. And now that I want out, they want both parts to let me go. And this is coming from a huge well-known swiss bank (well, not UBS and CS, but close), not some noname institution from the middle of nowhere.

The terms and conditions are weasely worded, but the relevant contract bit based on which they want the money seems to be this: "Der massgebende Prozentsatz pro Jahr entspricht dabei der Differenz zwischen dem im Zeitpunkt der vorzeitigen Fälligket geltenden Darlehenszinssatz und dem auf den selben Zeitpunkt erzielbaren Zinssatz für eine Anlage am Geld- und Kapitalmarkt mit entsprechender Restlaufzeit"

Is this s**t legal?

Has anyone went through the process of cancelling their mortgage in this era of negative rates? How was it handled? Did you manage to get them to at least waive the negative interest part?
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Old 02.09.2020, 23:24
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Re: Bank wants to charge negative rates to break mortgage!

https://www.englishforum.ch/finance-...est-rates.html
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Old 02.09.2020, 23:34
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Re: Bank wants to charge negative rates to break mortgage!

Try passing the mortgage on to the next buyer of your property...
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Old 02.09.2020, 23:50
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Re: Bank wants to charge negative rates to break mortgage!

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Try passing the mortgage on to the next buyer of your property...
I tried. For some reason most buyers seem to prefer getting financing from a different bank in the end or even just offering to take over the payment for Vorfälligkwitsentschädigung directly or as extra cash



I suspect my bank is playing weird games where they see the situation as a carte blanche to charge uncompetitive high rates for additional mortgage tranches needed because they have a captive audience and getting paid some either way
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Old 03.09.2020, 00:01
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Re: Bank wants to charge negative rates to break mortgage!

According to the Bank Ombudsman website it is a current subject, so you are not alone

http://www.bankingombudsman.ch/meldu...schaedigungen/

There have been court rulings in favour of the clients.
Follow the link there you will find information on how to proceed. In short contact the manager of your bank and refer to the court decisions.
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Old 03.09.2020, 00:25
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Re: Bank wants to charge negative rates to break mortgage!

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I suspect my bank is playing weird games where they see the situation as a carte blanche to charge uncompetitive high rates for additional mortgage tranches ...
If the rates are uncompetitive, is there another bank which would provide finance under better conditions, and help you to transfer to them?
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Old 03.09.2020, 01:03
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Re: Bank wants to charge negative rates to break mortgage!

Would you be allowed to rent it and maybe you rent a small flat but at the end, you have the house?


I would try it.
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Old 03.09.2020, 01:30
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If the rates are uncompetitive, is there another bank which would provide finance under better conditions, and help you to transfer to them?
You mean split mortgage between multiple banks? Complicated legally, few banks would go with that and still give you competitive rates

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Would you be allowed to rent it and maybe you rent a small flat but at the end, you have the house?

Could have been an option but I'm moving out if Switzerland and looking to just sell asap

Last edited by 3Wishes; 03.09.2020 at 13:42. Reason: merging consecutive replies
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Old 04.09.2020, 10:41
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Re: Bank wants to charge negative rates to break mortgage!

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According to the Bank Ombudsman website it is a current subject, so you are not alone

http://www.bankingombudsman.ch/meldu...schaedigungen/

There have been court rulings in favour of the clients.
Follow the link there you will find information on how to proceed. In short contact the manager of your bank and refer to the court decisions.
I wanted to add that the ombudsman offers help, should the bank refuse despite the rulings.
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