Is it possible to terminate a fixed mortgage for over 590K early?

Hello everyone!

Exactly one year ago, we took out a fixed mortgage for over 590,000 CHF because we thought the mortgage interest rate would only go up and never down!

Now the interest rate has dropped by a full 0.7%, which in our case means an annual saving of CHF 4130.00!!

Now we are all considering how to get a cheaper option. We asked the bank if we could at least extend early for a favorable interest rate. But that is not possible because the contract still lasts for 4 years and can only be extended one year before the end of the contract.

Assuming we won the lottery, we could pay off the mortgage and get out of the contract, right? If that is the case, could we not also take out a cheaper financing at another bank and use the mortgage loan we take out to pay off the more expensive mortgage debt at the other bank??

Looking forward to your answers!

A contract is a contract, and if you want to change it, the partner must agree, and a bank will only do that if it also has an advantage. Anyone who enters into contracts should know what they are doing. If things turn out differently than expected, you are always bound by the contract, even if it hurts.

Hello,

But a mortgage is meant to be paid back. In that respect, it is not a breach of contract if we amortize, for example, 500,000, right?!

But there is certainly an agreement on how repayment is made; if that is to be changed, the contract must be amended. To be able to change a contract, both partners must agree. If only one partner benefits, the other will not agree and does not have to. So if he is to agree, he wants at least an equivalent benefit. Contract law is that simple.

But there is certainly an agreement on how repayments are made; if this is to be changed, the contract must be amended. To be able to change a contract, both parties must agree. If only one party benefits, the other will not agree and does not have to. So if he is to agree, he wants at least an equivalent advantage. That's how contract law works.

Hello Wabe

Thank you for your explanations. Of course, a monthly repayment was agreed upon – called amortization. In our case, 1,000 CHF/month. If I understand you correctly, we could sit down with our bank and on the one hand try to increase this amortization – which our bank would probably welcome – or even negotiate, on occasion, larger sums to be repaid in a lump sum.

Hello andalusia,

Just have your bank calculate the amount of the prepayment penalty, then you can offset this amount against the interest savings.