Duration of rates : Should renewal be synonymous with change ?
Many people renew their mortgage with the same lender without necessarily checking whether it is still the best option, when comparing different lenders could save several thousand francs a year.
When their rate ends, more than two-thirds of borrowers renew their mortgage with the same institution. Of these, very few take the trouble to look at other possibilities and so miss out on better opportunities.
While renewal does not necessarily mean change, it is an opportunity to take stock and compare, to make sure you are getting the best deal. Even if you took the trouble to do this when you set up your loan, the conditions and your needs may have changed.
Why this inertia ?
Some people can spend hours (even days) surfing the internet to find the best deal when it comes to changing their TV set. However, these same people do not bother to do this type of research when it comes to their mortgage. For example, a 0.3% interest rate differential on a mortgage of CHF 1,000,000 represents savings of CHF 3,000 per year (excluding taxes), or CHF 30,000 over a 10-year period.
Lack of time? Lack of motivation? Why don't borrowers compare? If they stay with the same lender, it's mainly because they trust the offer they are given. But if the offer is good, it does not mean that it is the best one...
What to compare ?
In the same way as with a television, where you don't just look at the price but also at the features, determining the best loan offer is not just about the rate but about the overall mortgage strategy. See our dedicated article
Your situation has changed and you need to ensure that you are still getting the best deal for your needs. For example, as you get closer to retirement age, you may need to rethink your repayment strategy or, if your family structure has changed, you may need to adjust certain points.
You should also consider whether your loan should be renewed as is, reduced or increased. Let's say you bought a property worth CHF 1,000,000 with a mortgage of CHF 800,000 at a fixed rate over 10 years. You would have paid off a minimum of CHF 9,000 per year over the 10 years and your mortgage financing would currently amount to CHF 710,000. Assuming that your property has increased in value by CHF 200,000, you could now borrow up to CHF 960,000. Why increase your loan? There may be several reasons:
- purchase of an investment property
- purchase of a second home
- building up equity for a child
- increase in 3rd pillar A contributions
- making contributions to a 3rd pillar B
- repayment of LPP withdrawal
- buying back LPP (tax optimisation and improved retirement situation)
- investment in the stock market
The cost of this loan increase would be relatively low. At a rate of 1%, this would represent an additional interest charge of CHF 209 per month (compared to the situation without the increase), fully tax deductible. The amortization would increase to CHF 10,700 per year (compared to CHF 9,000 previously).
Who to compare with ?
Those who take the time to compare rarely go beyond two or three providers. Moreover, how do you know which lenders to select? Go for the best known? Rely on word of mouth? What if you miss an opportunity?
That's where we come in - our tools and advisors are here to make it easier for you. We combine the best of technology and people to save you time... and money.
Our online platform allows you to simulate your mortgage renewal in just a few clicks and to obtain the best offers according to your profile. If you then need help to study the different possibilities, our advisors can help you see things more clearly.
Our financing, pension and insurance specialists combine their talents to offer you the best experience and get you the best mortgage conditions.