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  #41  
Old 28.03.2012, 16:50
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Re: Mortgage loan for house

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Are we missing something really big here? We figure that there must be some reason why it is so widely reported, and indeed even done, to hold a mortgage 1 in Switzerland pretty much until you pass it on to your children. But somehow the numbers don't seem to add up when we try.
There are many complexities to the topic which people on here are far better at than I am, but I think it is pretty simple.

1. Mortgages here are cheap. I fixed for 5 years last week at around 1.5%.

2. Tax treatment of mortgages and debt means that the effective rate is lower than this even - so for the sake of argument say its an effective 1.25%.

3. Even conservatively, you'll get a better return than that by investing your money albeit not into a checking account at UBS. For example, average dividend payment from Nestle (forget capital growth) over the last 4 years has been 4.5%.

So in my very simple logic - its always better to try to put your money somewhere where a return of higher than the net mortgage rate. In your example, you have highly overestimated the cost of borrowing money (5%) and potentially underestimated the return on investment (2%) that you would otherwise get. Switch the numbers around and see what happens. If you have CHF500000 of liquid assets, you should be able to get a decent return if you are prepared to take a risk
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  #42  
Old 28.03.2012, 17:19
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Re: Mortgage loan for house

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1. Mortgages here are cheap. I fixed for 5 years last week at around 1.5%.
wow! That is a great deal! Do you mind sharing which bank you got it with?

edit: OK, I see here are some rates for 5 year mortgages, and AXA Winterthur is even at 1.4%! Maybe we need to break ours early...although I am not sure what penalties are involved with that.
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  #43  
Old 28.03.2012, 17:22
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Re: Mortgage loan for house

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wow! That is a great deal! Do you mind sharing which bank you got it with?
Valiant, but I think all banks are offering something similar. A colleague yesterday told me he fixed at 1.45% for 5 years
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  #44  
Old 28.03.2012, 17:27
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Re: Mortgage loan for house

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wow! That is a great deal! Do you mind sharing which bank you got it with?

edit: OK, I see here are some rates for 5 year mortgages, and AXA Winterthur is even at 1.4%! Maybe we need to break ours early...although I am not sure what penalties are involved with that.
The penalties can be quite a bit. But we are also looking to see if we should break the 10yr part of our mortgage. I just wish the DH had more time to deal with this. By the time we get to it, the rates will probably be back up! LOL.
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  #45  
Old 28.03.2012, 18:52
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Re: Mortgage loan for house

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The penalties can be quite a bit. But we are also looking to see if we should break the 10yr part of our mortgage. I just wish the DH had more time to deal with this. By the time we get to it, the rates will probably be back up! LOL.
The penalties are quite high. We were looking at a house which has a mortgage of about 800000 CHF with 10 year mortgage (6 years still left) and the owner was willing to give 60000 chf discount if we could takeover his mortgage. That basically meant that the he would have had to pay more than that if he breaks the mortgage. so it came to around 1.25% of the mortgage for every year still left. Please also note that higher the difference between your current rate and the new rate the bigger amount you pay as penalty. I can provide more details if needed by anybody
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  #46  
Old 28.03.2012, 20:49
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Re: Mortgage loan for house

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The penalties are quite high. We were looking at a house which has a mortgage of about 800000 CHF with 10 year mortgage (6 years still left) and the owner was willing to give 60000 chf discount if we could takeover his mortgage. That basically meant that the he would have had to pay more than that if he breaks the mortgage. so it came to around 1.25% of the mortgage for every year still left. Please also note that higher the difference between your current rate and the new rate the bigger amount you pay as penalty. I can provide more details if needed by anybody
As you wrote, the penalties depend on the difference between the current rate and the new rate. However, the person you are dealing with, I'm guessing, is looking at paying ALL of the interest because he isn't renegotiating. He is looking to get out of the loan.

But remember that if he is willing to go down so much the price of the house could also be too high.
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  #47  
Old 15.10.2012, 17:13
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Re: Mortgage loan for house

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So I went through the Comparis mortgage market (CHF 290 refundable upon completion) and got the following quotes for a 6 year fixed rate mortgage with 20% down. The figure unless otherwise stated is for both the mortgage 1 and mortgage 2 (amortisation i.e. the bit that eventually gets paid off).

BPS (Suisse) 2.5%
Bank Coop 2.4%
money-net.ch 2.3% (mortgage 1) 2.25% variable (mortgage 2)
Baloise Bank SoBa 2.55%
Axa Wintherthur 2.41 %
Regiobank Solothurn 2.45% (mortgage 1) 2.3% (mortgage 2)
Migros Bank 2.475%
Basler Kantonbank 2.33%
Post Finance 2.65%
Helvetica Versicherungen 2.45% (mortgage 1) 3.2% (mortgage 2)
UBS 2.7%

Hope someone finds the info helpful, its certainly saved me a lot of legwork.
What a difference a couple of years makes
I've just been throught he comparis mortgage market again (incidentally price has dropped to CHF 140) and for a 5 year fixed rate mortgage (20% deposit) Baloise Bank is willing to offer us an interest rate of 1.05%, with the next best provider BPS (Suisse) offering 1.25% and UBS 1.29% (their preferential rate).
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  #48  
Old 15.10.2012, 17:28
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Re: Mortgage loan for house

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What a difference a couple of years makes

Don't remind me!

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  #49  
Old 15.10.2012, 18:27
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Re: Mortgage loan for house

We signed up for a 2 year mortgage last November. My husband said he thought you could lock in a rate for up to 1 year in advance - does anyone know this is true? Of course, we might open a new can of worms reminding Raiffeisen that I am a customer of theirs, and American

Anyways, if it is true, I figured it would make sense to lock in a 5 year rate...
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Old 15.10.2012, 18:41
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Re: Mortgage loan for house

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We signed up for a 2 year mortgage last November. My husband said he thought you could lock in a rate for up to 1 year in advance - does anyone know this is true? Of course, we might open a new can of worms reminding Raiffeisen that I am a customer of theirs, and American

Anyways, if it is true, I figured it would make sense to lock in a 5 year rate...
It won't be free !
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  #51  
Old 15.10.2012, 18:54
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Re: Mortgage loan for house

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We signed up for a 2 year mortgage last November. My husband said he thought you could lock in a rate for up to 1 year in advance - does anyone know this is true? Of course, we might open a new can of worms reminding Raiffeisen that I am a customer of theirs, and American

Anyways, if it is true, I figured it would make sense to lock in a 5 year rate...
You can with the ZKB. They advised this in January for our 5-year fixed mortgage which was due to be renewed in August.

They told me they expected rates to go up, so I signed the papers - and of course rates dropped. Bl**dy banks...
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  #52  
Old 15.10.2012, 19:02
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Re: Mortgage loan for house

Well, I guess I will go to our paperwork and their website and try and decipher all the German babble
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  #53  
Old 15.10.2012, 20:22
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Re: Mortgage loan for house

Hi Folks,

I would be very interested to learn what the exit penalties/fees are associated with leaving a fixed rate mortgage early. Are there ever extenuating circumstances, such as sale of the property? This information does not seem to
be freely available on the ZKB website, for example, I am fairly sure one needs to get into discussion with them.

http://www.zkb.ch/de/startseite/priv...ebersicht.html

I note that
vorzeitiger Ausstieg gegen Entrichtung einer Vorfälligkeitsentschädigung möglich
so what kind of money are we talking?

Thanks.
JV
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  #54  
Old 15.10.2012, 20:26
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Re: Mortgage loan for house

I *think* it might be on the order of magnitude of the amount of interest you would not be paying them, but I think I have heard it can be a bunch depending on how early you want to terminate the loan. I think there are threads on here somewhere, maybe in the house buying thread...
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Old 15.10.2012, 20:31
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Re: Mortgage loan for house

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Hi Folks,

I would be very interested to learn what the exit penalties/fees are associated with leaving a fixed rate mortgage early. Are there ever extenuating circumstances, such as sale of the property? This information does not seem to
be freely available on the ZKB website, for example, I am fairly sure one needs to get into discussion with them.

http://www.zkb.ch/de/startseite/priv...ebersicht.html

I note that
vorzeitiger Ausstieg gegen Entrichtung einer Vorfälligkeitsentschädigung möglich
so what kind of money are we talking?

Thanks.
JV
Essentially you can only get out of a fixed mortgage contract by paying a penalty. When I asked, it was the same as 5 years' payments on a 5 year contract.

The b@stards have got you. The only way they waive the penalty is if you take out another contract at a higher %. ...
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Old 15.10.2012, 20:36
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Re: Mortgage loan for house

Thanks for the info -

but I have read elsewhere suggestions that you can have the buyer take over
the mortgage. Now with the kinds of numbers you're quoting, that would be
nigh on essential. Indeed one could pay the buyer a premium to take over
your mortgage. Has anyone actually read their paperwork to clarify their own
particular deal?

Under these circumstances I'd feel that a Libor mortgage might offer more flexibility.
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  #57  
Old 15.10.2012, 23:23
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Re: Mortgage loan for house

Jules, if you think you might be selling soon, consider taking out the mortgage in tranches of varying lengths, so that you can reevaluate your options as each tranche comes due.

We have been wanting to sell the house for quite some time now... the only reason we haven't yet is that we can't find any place else to buy. But that has left us in limbo. So we did the math, and found that it was a better option to pay off a couple of tranches as they came up for renewal rather than incur a penalty for early exit from the contract.

Swiss mortgages, especially those longer term fixed rates, are a very good thing IF you are fairly certain what the future holds. If not... think carefully before you sign the dotted line, and read the fine print three times.

FYI, if a seller asked me to take over his mortgage I would demand serious incentives to do so, as in asking the seller just tipped his hand. So be careful about how you broach that discussion. Just a hint.

Good luck!
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Old 15.10.2012, 23:26
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Re: Mortgage loan for house

As always, thanks MC for your suggestions.
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Old 15.10.2012, 23:53
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Re: Mortgage loan for house

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Jules, if you think you might be selling soon, consider taking out the mortgage in tranches of varying lengths, so that you can reevaluate your options as each tranche comes due.

We have been wanting to sell the house for quite some time now... the only reason we haven't yet is that we can't find any place else to buy. But that has left us in limbo. So we did the math, and found that it was a better option to pay off a couple of tranches as they came up for renewal rather than incur a penalty for early exit from the contract.

Swiss mortgages, especially those longer term fixed rates, are a very good thing IF you are fairly certain what the future holds. If not... think carefully before you sign the dotted line, and read the fine print three times.

FYI, if a seller asked me to take over his mortgage I would demand serious incentives to do so, as in asking the seller just tipped his hand. So be careful about how you broach that discussion. Just a hint.

Good luck!
If you are serious about selling wouldn't you not commit to any term rates and keep it all on the libor? Unless you think your house may be on the market for a long time. Its the lowest rate (currently) and has complete flexibility.
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Old 16.10.2012, 00:05
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Re: Mortgage loan for house

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If you are serious about selling wouldn't you not commit to any term rates and keep it all on the libor? Unless you think your house may be on the market for a long time. Its the lowest rate (currently) and has complete flexibility.
I've been househunting long enough now that the original tranches are either rolled into libor or paid off. (That decision is based on other investment opportunities or lack thereof at renewal date...) As there is so much talk of rising rates, we've calculated at what rate the tradeoff between fixing a rate and paying an early exit penalty hits... if we see that rate approaching and there is no new home in sight, then we'll likely fix for a year or so. Right now with all the uncertainty (in rates, and in our plans) libor is the best bet - for us. As always YMMV.
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