Falling mortgage rates: seize the opportunity to buy your own home
Anyone who owns a home or is looking to buy one has reason to be pleased: mortgage interest rates have fallen noticeably in recent months. However, to benefit from this when refinancing or taking out a new mortgage, there are a few points to bear in mind.
When it comes to interest rates, we can safely call this a golden autumn. Rates are at an attractive, low level not seen for months. It’s important to seize this opportunity when taking out a new mortgage or refinancing an existing one! “Now is the ideal time to realise that long-cherished dream of home ownership or to refinance your existing property in a smart way,” explains Thomas Graf, an experienced estate agent from Bern. The finance portal ‘Cash’ recently published a guide with tips on falling mortgage rates. Here is a brief extract.
Compare offers
The first mortgage offer you come across isn’t always the best. It’s worth obtaining various quotes. It can also be worthwhile to look not only at offers from traditional banks, but also at online mortgages or mortgages from insurance companies and pension funds.
Make the most of your room for negotiation
Even if you may not feel particularly keen to do so, it’s worth negotiating. This is because lenders often have some room for negotiation, which you should make the most of. Beware of ‘fake’ discounts: although a discount is offered here, it is often far too low and serves one main purpose: to discourage customers from asking for an even bigger discount.
Take your time
Making decisions under time pressure is never advisable – especially when it comes to mortgages. Even if discounts are offered as an incentive to sign quickly, it makes sense for homeowners or prospective buyers to take the time needed to compare different offers and find out exactly what the terms and conditions entail.
Improving your personal credit rating
Despite the favourable interest rate environment, it is worth highlighting your strengths to the mortgage provider and, where possible, improving your personal credit rating. The loan-to-value ratio, affordability and mortgage amount are the key factors in securing favourable interest rates. It therefore makes sense to ask the lender specifically which criteria would improve your interest rate.
Planning with the right term
The right term varies depending on your personal and financial situation. You should always bear in mind any early repayment penalties that may apply if you pay off a mortgage early. To spread the risks, it may in some circumstances be advisable to take out mortgages with different terms. In principle, only those with sufficient financial flexibility should take out a Saron mortgage. Despite the fixed-term commitment and the refinancing risk – should interest rates be high at the end of the term – a fixed-rate mortgage can provide the desired planning security.
Choosing the right mortgage amount
It is not uncommon for the mortgage amount to be set too high or too low. A look at real-world practice shows that, among older property owners, the mortgage is often on the low side and a significant amount of capital is tied up in the property. Among younger owners, the mortgage is often higher than is actually necessary. However, the interest costs must always be weighed against the tax benefits.
Study the loan agreement at an early stage
The devil is often in the detail. To avoid unpleasant surprises – for example, regarding termination clauses – it is advisable to request the loan agreement right at the start of the negotiation process. This gives you the opportunity to study the content at your leisure and to clarify any ambiguities or questions at an early stage.
Amortise correctly
In general, during a period of low interest rates, it makes sense to amortise your mortgage indirectly. As a borrower, you pay an amount contractually agreed with the bank into a 3a account, a custody account or a pension policy. You benefit from the interest earned in the third pillar whilst also being able to deduct the mortgage from your imputed rental value for tax purposes. However, direct repayment also has its advantages, as it reduces the mortgage debt – and therefore the interest burden – each year.
Comprehensive expertise in property, finance and mortgages
The experienced property team at thomasgraf ag will be happy to provide you with personalised, expert advice on home ownership – whether it be a flat or a detached house. This established property service provider also offers an exciting selection of attractive properties for sale in both categories. thomasgraf ag is a certified member of the Swiss Chamber of Estate Agents (SMK) and will also support you in the sale of a property – providing a personalised service that meets the highest quality standards. Thanks to thomasgraf ag’s close cooperation with the asset manager and family office service provider TRIONINVEST, as well as the financial services provider hypolino ag , we offer you combined property-specific and financial expertise, many years of industry experience and a strong network.