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Old 31.01.2019, 09:42
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Refinancing only 1st Mortgage

Hi,
When you take a mortgage for the first time, it is easy to compare the offers by several providers online (e.g comparis.ch). each such offer assumes the 15% (second mortgage) is paid back in 15 years. but are we allowed to pay this 15% earlier and then refinance only the first mortgage. because the remaining mortgage is only 65% of the total value of the property, i heard that the refinancing should be easier at a lot less mortgage rates. but banks do not give these rates openely because they do not like it (obviously they want you to pay on the full amount for a long time). does anyone have an idea about what kind of interest rates we can expect to refinance only the first mortgage after a few years after taking out the mortgage.
Eg: we take a mortgage (5 year fixed) and pay the second mortgage 15% in these 5 years.when the mortgage comes for refinancing, there is only 65% left to be paid. is it easy to shop around the lenders expecting a significantly better rate because of paying back the 2nd mortgage.


cheers
happycreature
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Old 04.02.2019, 17:01
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Re: Refinancing only 1st Mortgage

I'm not exactly answering your question, but hope this helps:


I had the usual 65%/15% mortgage. The 65% was fixed for 5 years. When the 5 years came up, the bank re-evaluated my apartment. As they ended up with a higher evaluation, they offered to convert the whole mortgage into a 1st morgage only (if they didn't they know I could walk into another bank for a similar deal).


Eg., orignal apartment evaluation was 800k. Mortgages were 520k and 120k.


New evaluation after 5 years was 1m. As the total mortgage was just above 600k (after some repayments), therefore it is less than 65% of the property value. Therefore the bank offered to switch it all to 1st mortgage only. As 1st mortgage is cheaper than 2nd mortgage and can be fixed for the long term, we said yes! Money I saved from not having to pay the principal goes into a long term investment fund.
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Old 04.02.2019, 17:47
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Re: Refinancing only 1st Mortgage

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I'm not exactly answering your question, but hope this helps:


I had the usual 65%/15% mortgage. The 65% was fixed for 5 years. When the 5 years came up, the bank re-evaluated my apartment. As they ended up with a higher evaluation, they offered to convert the whole mortgage into a 1st morgage only (if they didn't they know I could walk into another bank for a similar deal).


Eg., orignal apartment evaluation was 800k. Mortgages were 520k and 120k.


New evaluation after 5 years was 1m. As the total mortgage was just above 600k (after some repayments), therefore it is less than 65% of the property value. Therefore the bank offered to switch it all to 1st mortgage only. As 1st mortgage is cheaper than 2nd mortgage and can be fixed for the long term, we said yes! Money I saved from not having to pay the principal goes into a long term investment fund.



But you didn't "save" on the principal as it is still owed !


Where you did save was on the lower interest rate for Chf 120k, although with interest rates so low, does it really constitute a saving ?
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Old 04.02.2019, 19:25
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Re: Refinancing only 1st Mortgage

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But you didn't "save" on the principal as it is still owed !


Where you did save was on the lower interest rate for Chf 120k, although with interest rates so low, does it really constitute a saving ?
Thanks. I used the wrong word. What I meant to say is, money I didn’t have to use to pay the principal goes into an investment fund.
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Old 14.04.2019, 20:40
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Re: Refinancing only 1st Mortgage

Could I add some question to this thread, please? How much freedom is there when renegotiating an interest-only mortgage? Could one, for example, choose to pay off part of the loan (that is up for renegotiation), or does one have to pay it off completely, or how flexible can I expect the bank to be with these negotiations? How about a reevaluation of the house? Do I have to ask for one, or will they ask for such a visit?

Thanks.
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Old 14.04.2019, 20:48
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Re: Refinancing only 1st Mortgage

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Could I add some question to this thread, please? How much freedom is there when renegotiating an interest-only mortgage? Could one, for example, choose to pay off part of the loan (that is up for renegotiation), or does one have to pay it off completely, or how flexible can I expect the bank to be with these negotiations? How about a reevaluation of the house? Do I have to ask for one, or will they ask for such a visit?

Thanks.

Go ask your lender, what anybody says here is pure speculation !


In principal, you can pay off part of the loan and keep the rest, the real question is though, does it make sense with interest rates at less than 1% and in addition you lose out tax wise (and gain a bit more fortune to pay tax on )


You can reevaluate it you want, but it is the banks' evaluation that will count when they are lending the money, so maybe get them to do it.
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