Quick recap: we’re buying a primary residence in Lausanne with a mortgage of around CHF 1,200,000. This is a family home, not an investment property, so peace of mind matters — which is why I’ve already decided to go with a fixed rate rather than a variable one. The remaining question is the term length: 5 years at 1.43% or 7 years at ~1.48% (1,43% for first 5y and 1,59% for 2 last years).
— Advantages (for me) for 7 years —
+ The cost difference seems to be minimal: 0.05% (CHF 650/year*) in extra interest — a small price for 2 additional years of certainty. + Renewal risk: on a mortgage above CHF 1.2M, even a modest rate increase at the 5-year mark could meaningfully affect our monthly budget. Locking in until 2032 removes that uncertainty entirely. + Simplicity: Next negociation in 7 years
— Why I’m hesitating —
• Early exit penalties: if we had to sell before the end of the term, probably exit fees? — but I haven’t seen the contract yet and have no idea how significant it could be on a mortgage this size.
• Rate trajectory: it’s genuinely hard to have any visibility on where Swiss rates will be in next years. If rates drop further, being locked in until 2032 means we can’t take advantage of it.
— My questions —
Are there factors I haven’t considered that should tip the balance?
Don’t hesitate to share your thought, experience and especially with early exit penalties on Swiss fixed mortgages
Again, your thoughts make sense to me, the longer term (7y) seems reasonable.
It’s only two years more. The risk of having to sell in the first five years remains the same. I wouldn’t worry about it. You’re not planning on selling, don’t base your future on the unexpected. Of course, it might make sense to clarify in writing with your partner how an early exit would be handled between the two of you. And then forget about it
Maybe it’s wishful thinking. But the rates are so low already, I see a higher chance of the rates going up.
But won’t you have the same risk 2 years later?
It could be that in 5 years rates are still where they are right now, but spike up in the following 2 years…
Locking in until 2032 removes that uncertainty for 2 more years, not “entirely”.
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How about splitting the mortgage in half:
50% run for 5 years
50% run for 7 or even 10 years?
PS: did you seriously need Claude to calculate 1’200’000 x 0.05%?
We bought a house with the goal to increase life quality with 2 small children- best decision ever.
I consider 1. and 2. pillars the safe investments of the portfolio (including buybacks)
I take more risk with 3. pillars, and max risk with Ib1t
I do not consider the house an investment part of the portfolio, but an expense to increase life quality. A part of the budget goes to it and that’s it.
For the same reason, it was clear we wanted a fix mortgage with longest duration. We locked 10y at 1.4%. No worries till then. I would not chill with Saron. I would not split (no room for negotiation between the 2). I would ask the question: which premium/budget are you ok to pay to have peace of mind.
I’m delighted that we’re having this kind of exchange. I can see that overall we’re aligned in our ‘strategies’. I think, I need sometime just to share my opinions to feel reassured. Thank you for your feedback!
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