Morgage to choose

Real Estate
1

Dear Mustachians, I appreciate your wisdom and wanted to ask you opinion about following mortgage.

We bought a house (vente a terme) and the seller want to sell quickly.
So next week we go to the bank to sign for the mortgage.

They try to “push” us towards a 10 year mortage at 1,78 percent and their Saron Margin is 0,9 pct.
We take out a 80% loan on the property.

I however am tempted to take almost everything in Saron and take out a fixed in 3/4 months. After the next SNB interest rate cut that is widely accepted. The bank says that de interest rate cut will not affect the 10 year rate much. But If I look at the curves the 10 year rate follows the SNB rate.

What would you do in my situation?

2

Check this topic: Mortgage rates in Switzerland [2024]

Also the imminent rate cut is basically fully priced in already.

3

If I were you, I would take the offer from the bank and ask two more banks. Moreover, I personally would stay in Saron. If you are on the edge with the costs and you can not tolerate a bump regarding the interest rates, then saving the margin/interest rate can make sense.

The forward for a 10y fixed with starting date in 18 months is ca. 7bps, which is incredibly low.
On other products, it is between 0.00 - 0.07% in total.

90bps is in my eyes to high. Sounds like a standard offering by UBS with bringing NNA (without NNA it is 100bps).

4

You can get 1.64% here: Bei der BVK profitieren Sie von attraktiven Hypothekenzinsen zu Top-Konditionen.

5

Market is pricing in 0.50% SNB rate by summer 2025.

6

That’s what they want, but what do you want? Did they sell at a discount because of a hurry? Or did you agree on a certain deadline?

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7

They sold at a large discount because they were in a hurry. We made a take-it or leave it offer about 15pct under asking. The house was valued by the bank at about 10% more than what we pay

8

In this case I would probably take whatever works, but with the shortest duration possible. Either SARON/variable with the lowest term to cancel or 2 years fixed. Or even a margin loan :thinking:

9

Haha wish I had enough VT to just buy a house on margin and don’t think twice about it.

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10

UBS offer a flexible SARON mortgage that you can terminate early.

11

Check the other thread about mortgages as mentioned above. 1.78% for 10 year is expensive, these days you should target below 1.5% for a 10 year fix. I would take the most flexible mortgage solution they offer e.g. a saron for up to 6 month maturity if that exists and give myself the time to compare mortgage offers at other banks if you are in a hurry and need to close the deal. However if you have time to ask other banks I would do that because you are being run over with those ridiculous offers and that’s why they push you to accept the 1.78% offer, your advisor might still have to reach some targets for this year…

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12

Thanks so much for the advice. I will push for a Saron mortgage with a short duration of contract and re-asses when time is more on my side. Will let you know how it goes.

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