Are you planning to sell your residential property or would you like to switch your existing mortgage to UBS? Find out when it makes sense to repay your mortgage.
Repay your mortgage at the right time
A mortgage without a fixed term (e.g., a variable mortgage) can be terminated and repaid at any time, subject to the period of notice (as a rule, this is three months).
Mortgages with a fixed term (e.g., fixed-rate or even Libor mortgages) can be repaid at the end of the contractual term.
In general: check the contractual provisions governing termination. In the event of extraordinary notice of termination, you or possibly even the bank may have to compensate the other party – depending on the current level of interest rates.
Repaying fixed mortgages with varying maturities
This can be done. However, since the mortgage notes, which serve the initial lender as collateral, are often not tied to individual mortgage tranches, they must be released to the new lender early on in exchange for a promise to pay.
Alternatively, the registered land charge can be divided up, though you as client will most likely have to bear some extra costs.
Repaying a mortgage before the end of the contract term
You can also repay your mortgage before the end of its term. In this case, you may owe the previous lender a prepayment penalty. The penalty amount is calculated based on the terms of the given contract. The penalty is often calculated based on the difference between the agreed mortgage interest rate and the interest rate obtainable at the time the contract is terminated. You should compare what you'd save in interest with the prepayment penalty you'd have to pay. Repaying your mortgage early is only worth it if the savings are higher.
Would you like to replace your mortgage?
Make an appointment for a personal consultation. We'll be happy to review whether repaying your mortgage is worth it.