×

Whether your debt is reaching maturity or you wish to benefit from more favorable market conditions, you have the right to proceed with a mortgage refinancing.

  • Also called mortgage renewal or mortgage replacement, this operation allows you to obtain a new contract either with your current lender or with a third party.
  • Refinancing your mortgage can help you optimize your interest rate, free up liquidity, or adapt to a change in your financial situation.
  • In some cases, however, it may be wiser to extend or amortize your mortgage… but when?


Mortgage refinancing: definition

Mortgage refinancing consists of replacing an existing mortgage contract with a new one, either with your current bank or with a new lender. This operation allows you to redefine the following elements:

  • The interest rate: to benefit from a drop in market rates.
  • The loan model: switching from a fixed rate to a SARON rate (or vice versa).
    Moving to SARON allows the loan to closely follow market conditions, but it requires planning for a conversion option to a fixed rate in order to protect yourself quickly if rates rise sharply.
  • The duration: starting a new financing cycle (for example 10 or 15 years).
  • The amount: increasing the debt to finance other projects.


In short, refinancing acts as a financial management tool that allows you to adapt to market conditions in order to ensure the long-term sustainability of your real estate investment.


Why refinance my mortgage?

In a real estate market where interest rates fluctuate according to the decisions of the Swiss National Bank (SNB), remaining tied to a contract signed under less favorable conditions can become costly for your annual budget.


Optimize your interest rate to reduce costs

Even a small decrease in interest rates (for example 0.5%) can represent several thousand francs in savings per year on a typical Swiss mortgage. Over the total duration of a 10-year loan, this optimization can significantly increase your purchasing power.


Free up liquidity thanks to property value appreciation

If the value of your property has increased since its purchase, refinancing allows you to increase the mortgage amount (up to 80% of the property's market value).


These funds can then be reinvested to finance energy renovations or property extensions.


Adjust your budget to life changes

Renewing your mortgage is an opportunity to adjust your monthly payments to match a new personal situation. Whether it is retirement, a change in income, or the desire to reduce fixed costs, restructuring your debt can help rebalance your finances and secure your future.


When should you refinance, extend or amortize a mortgage?

In Switzerland, lenders allow you to lock in a rate up to two years before maturity thanks to a forward mortgage, which offers valuable protection against rising interest rates.


Refinance to change financial institution

This option should be considered if a competing institution offers a significantly lower rate than your current bank. It requires a careful comparative analysis to ensure that the interest savings cover any transfer costs for the mortgage note.


Extend for simplicity and continuity

Extending your mortgage is recommended if your current bank matches the best market rates or if your file contains particular elements that your current advisor already understands well.


By staying with the same lender, you avoid new credit review procedures and, most importantly, you avoid the transfer fees of the mortgage note, which can amount to several hundred francs depending on cantonal fees.


Amortize to reduce long-term debt

By repaying part of the principal when renewing your mortgage, you reduce your future interest burden. This is a prudent strategy that strengthens your equity share in the property.


Summary table: when to change, extend or restructure a mortgage?

Action Ideal timing Main objective Expected cost
Refinance 12 to 18 months before Lower interest rate (competition) Mortgage note transfer, administrative fees
Extend 3 to 6 months before Simplicity and continuity None or minimal
Amortize At renewal Reduce debt
None

How to renew a mortgage

To obtain the best financing conditions for a new mortgage, we recommend following these steps:

  1. Market analysis: review expert forecasts on the evolution of the Swiss National Bank’s policy rate and fixed mortgage rates.
  2. Compare offers: request at least three offers from cantonal banks, insurance companies, and pension funds.
  3. Property valuation: the new lender will carry out an appraisal to confirm that the loan-to-value ratio remains sound.
  4. Mortgage note transfer: your new bank organizes the transfer of the mortgage note from the former institution.


The objective is simple: by putting lenders into competition 18 months in advance, you regain negotiating power and can save thousands of francs in interest.


Advantages and disadvantages of refinancing

Advantages

  • Lower fixed costs: reduced monthly interest payments.
  • Greater security: possibility to lock in a low interest rate for a very long period (sometimes up to 25 years).
  • Flexibility: integration of new clauses such as easier early exit options.


Points to watch

  • Early repayment penalties: breaking a fixed-rate mortgage prematurely can be very expensive in Switzerland.
  • Administrative costs: application fees, notary fees, or land register fees for transferring mortgage notes.
  • Equity requirements: if the value of the property has decreased, the bank may require a partial repayment.


In conclusion, refinancing becomes financially advantageous when the interest savings cover the transfer costs within only a few months.


FAQ: Learn more about mortgage refinancing

When is the best time to renegotiate your mortgage rate in Switzerland?

Ideally, you should begin the process 18 to 24 months before the maturity of your current contract. This allows you to take out a forward mortgage if rates are low, protecting you against a potential increase before the end of your loan.


How can you avoid early termination penalties?

To avoid early repayment penalties (which can be significant), it is usually best to wait until the contractual maturity date. However, if the new interest rate offered is significantly lower than the current one, the savings may sometimes offset the cost of the penalty. A profitability calculation is essential.


Can mortgage refinancing costs be deducted from taxes?

In Switzerland, interest payments are deductible from taxable income. However, costs related to creating new mortgage notes or bank administrative fees are generally not deductible, unlike regular property maintenance expenses.


Is it possible to transfer a mortgage to another bank without fees?

The transfer of the mortgage note itself is simple, but administrative fees from the land registry or notary may apply depending on the canton. However, most banks accept these transfers without significant costs if the file is complete.