Experts estimate that six out of ten real estate owners pay too much for their mortgage, in some cases massively. Especially when it comes to mortgage renewals, people often don't get the most out of them. This has to do with the fact that the more expensive, soon to be due mortgage is simply replaced with a cheaper one. The layman usually does not get an overview of what is possible in the market and trusts the advisor of the financial institution, believing that he is now benefiting from the very best and most extreme conditions. In addition, the change of bank is seen as complicated and tedious, and people fear that they are not equal to the experts in terms of professionalism and that they cannot properly assess the financial market.
Negotiate without fail
Negotiate confidently, after all, you are the customer of the bank or lender. It is also not necessary that you are familiar with the financial market, for that you seek advice from the experts. They should explain to you what it means when Libor changes and what a reference interest rate is. However, you should familiarize yourself with the market before you start negotiating. This is how you can easily get an overview of the current benchmark interest rates on the Internet. However, guideline interest rates are – as the word implies – only guidelines. These can be improved if, for example, a good affordability can be demonstrated or the household income is above average. Such advantages must also be brought into the negotiations with the lenders.
It can be useful to consult a neutral advisor when choosing a financial institution.
Check before you commit
A good overview of the market can only be obtained by asking at least five providers for a quote. An important rule is that the first offer is not always accepted. Those who negotiate, according to the experts, close better with discounts of 0.1 to 0.15 percentage points – so the effort is worthwhile. Banks are more willing to talk today as the mortgage market becomes more competitive. Only recently, a new large direct provider, Postfinance, came onto the market, which wants to gain as many customers as quickly as possible with favorable offers. Insurers are also becoming more and more involved in the market. In addition, lenders are also under pressure from politicians: if the imputed rental value is abolished one day, it is likely that mortgage interest could no longer be deducted for tax purposes. That would discourage many from building a home or buying condominiums.
Check portability
If you want to negotiate safely, you must also check affordability in advance. A mortgage is affordable if the total housing costs do not exceed one-third of income. In addition, there must be at least 20 percent equity. For the affordability calculation, however, not the current interest rates are used, but so-called imputed interest rates. This ensures financing even if interest rates should rise. The property represents collateral for the bank; the mortgagee assigns the property as collateral to the bank and receives financing in return.
Independent advice
It can be useful to consult a neutral advisor for the choice of financial institution. Employees of a bank or an insurance company are undoubtedly committed to their customers and calculate the most favorable offer for them – but they are always bound to their employer and understandably also obligated to it. Therefore, it can be useful to hire a neutral consultant, obtain the most favorable offer and negotiate with the various providers. This is not free of charge – but the fee is usually covered by the savings. After all, for a ten-year fixed-rate mortgage, an interest rate advantage of 0.25 percent can bring a saving of 12,500 francs.
The property represents a security for the bank.
Totally digital
The Swiss are skeptical and cautious when it comes to money. Especially for large sums, such as the financing of a house. Is it really possible to conduct such transactions securely via the Internet?? Surveys often cite "lack of trust" and "shop window prices" as reasons for skepticism. However, the consumer can assume that a reputable bank or insurance company can be classified as equally reputable via the Internet as in a personal contact. More and more bank customers are taking advantage of digitization and foregoing the trip to a branch and thus an advisory meeting, and the trend is rising. New technologies, new platforms and tools allow customers to contact their bank at any time and from any location.
The modern consumer wants to adhere less and less to opening hours and take care of his mortgages from home on a rainy Sunday afternoon, for example. And anyone who observes and checks the market and the offers will quickly discover that online offers are often among the most favorable. Actually, it makes sense: the customer obtains all the information himself, makes comparisons, collects all the documents and enters the financing data himself via the Internet platform, right up to the application. The consultation is no longer necessary – the bank can pass on this advantage.