Staggering Mortgage Terms
Is It a Good Idea to Have Multiple Terms?
Many homeowners ask themselves the same question: What happens if my expires just when interest rates are high? For this reason, banks often recommend splitting a mortgage across multiple . This is referred to as a or splitting the Mortgage.
But be careful: From the customer’s perspective, this strategy usually doesn’t make sense.
Hypothek
Eine Hypothek ist ein Darlehen für den Kauf oder Bau einer Immobilie in der Schweiz, bei dem die Liegenschaft als Sicherheit dient. Hypotheken können direkt bei einem Hypotheken-Anbieter abgeschlossen werden oder über Hypotheken-Plattformen. HYPOTHEKE.ch ist die grösste online-Hypothekenplattform. Die wichtigsten Hypotheken in der Schweiz sind folgende: Festhypothek,SARON-Hypothek
The term of the mortgage refers to the period for which a mortgage is taken out under the agreed-upon terms. Depending on the type of mortgage, the term can range from a few months to many years. The choice of term affects, among other things, the interest rate, planning certainty, and the flexibility of the financing.
With a staggered Mortgage, the total Mortgage is divided into several tranches with different Terms. This means the Mortgages do not all mature at the same time, which can reduce the risk of interest rate fluctuations when performing an Extension. Many bank advisors recommend this approach. The problem: When performing an Extension on the first tranche, you as the customer are tied to that financial institution and must, in effect, accept whatever Interest rate they offer. Read more here: Should you stagger your Fixed-rate mortgage or not?
Explanation
What does “Mortgage staggering” mean?
With tiered structuring, the Mortgage is divided into several with different terms.
Example
A mortgage of 900,000 CHF is divided into 3 tranches of 300,000 CHF each, with different terms. The amount itself is not the key factor here; rather, it is the difference in terms.
Eine Hypothek kann in mehrere Teilbeträge aufgeteilt werden. Diese Teilbeträge werden als Hypothekentranchen bezeichnet. Jede Tranche kann eine eigene Laufzeit, ein eigenes Hypothekarmodell und einen eigenen Zinssatz haben. Viele Immobilienbesitzer nutzen Tranchen, um das Zinsrisiko zu verteilen. Gleichzeitig kann eine Aufteilung aber auch die Flexibilität einschränken und die Verhandlungsposition beim Hypothekenabschluss gegenüber dem Kreditgeber schwächen. Mehr dazu auch hier: Fehler vermeiden beim Abschluss der Hypothek
This means that not the entire Mortgage matures at the same time. The idea behind the staggered structure is simple. If interest rates are high when a , it affects only a portion of the Mortgage. This creates a certain degree of At first glance, this sounds reasonable.
Fälligkeit der Hypothek
Die Fälligkeit bezeichnet den Zeitpunkt, an dem eine Hypothek oder eine Hypothekentranche endet und verlängert, abgelöst oder zurückbezahlt werden muss. Spätestens bei der Fälligkeit lohnt sich ein Vergleich verschiedener Hypotheken-Anbieter. Wer frühzeitig plant, kann bessere Hypothekarzinsen sichern und die Hypothek besser verhandeln.
Unter Diversifikation des Zinsrisikos versteht man die Verteilung einer Hypothek auf verschiedene Laufzeiten oder Hypothekarmodelle. Ziel ist es, das Risiko zu reduzieren, die gesamte Hypothek zu einem ungünstigen Zeitpunkt verlängern zu müssen. Die Strategie kann sinnvoll sein, führt jedoch oft auch zu einer stärkeren Abhängigkeit vom bestehenden Kreditgeber und sollte deshalb sorgfältig geprüft werden. Mehr dazu hier: Hypothek staffeln oder nicht?
Visualization
Effects & Costs
Caution
Dependence on the existing provider
What many people underestimate: Staggered mortgages make it extremely difficult. When one tranche expires and another continues for several more years, problems arise.
Ein Anbieterwechsel der Hypothek bedeutet, dass eine bestehende Hypothek bei Ablauf oder unter bestimmten Voraussetzungen zu einer anderen Bank, Versicherung oder Pensionskasse übertragen wird. Durch einen Hypothekenvergleich verschiedener Hypothekarangebote können oft deutlich bessere Hypothekenzinssätze erzielt werden. Hypotheken-Plattformen wie HYPOTHEKE.ch helfen dabei, die beste Hypothek zu finden.
In practice, it is precisely this situation that often leads to higher interest rates. And that is exactly why many bank advisors recommend a tiered structure.
Frequently Asked Questions
Answers Regarding Mortgage Tiered Rates
Many people want to avoid having to refinance their entire Mortgage right in the middle of a period of high interest rates. The goal of staggering the payments is to reduce interest rate risk.
That depends on the situation. A tiered structure spreads the across different Terms—which sounds attractive at first. The downside: You lose flexibility, switching providers becomes more complicated, and your negotiating position is often weakened.
In practice, a staggered structure is usually unnecessary. Those who wish to diversify their interest rate risk can achieve the same goal with two tranches whose terms differ by only about 18 months—without having to accept the disadvantages of a rigid staggered structure.
Das Zinsänderungsrisiko beschreibt das Risiko steigender oder schwankender Hypothekarzinsen. Es kann mit Festhypotheken,Forward-Hypotheken oder einer abgestimmten Hypothekarstrategie reduziert werden, oft zulasten maximal tiefer Zinsen.
Dependence on the existing mortgage lender. When mortgage tranches have different terms, switching to another bank is often difficult. Many borrowers are unaware that, if their mortgage is structured in tranches, they are tied to their current mortgage lender and cannot switch.
Many banks will only apply for mortgages if the remaining terms aren't too far apart
A difference of more than 18 months is often considered problematic.
Often, yes. A combination of a fixed-rate mortgage and a SARON mortgage can be more flexible than several long-term fixed-rate mortgages—it combines planning security with the opportunity to benefit from lower market interest rates.
However, you should also remain vigilant with the SARON Mortgage: Once the initial term expires, the interest rate or margin may be adjusted. Forward-looking planning is therefore crucial even with this combination.
If the terms of the tranches differ by more than 18 months, switching providers is often difficult.
Video on the topic
Many people make the mistake of taking out multiple mortgages with different Terms. Bank advisors aren’t always entirely impartial on this issue, either. Watch the video to learn everything you need to know about staggered mortgages
@Mortgage
Florian Schubiger
Founder of Mortgage.ch
Appearances Can Be Deceiving
Split borrower's note as a Solution
It is often argued that provides more flexibility when switching providers. In practice, however, this usually works only to a limited extent. Many new providers require that the remaining tranches be applied for at a later date—and charge higher interest rates if splitting is necessary. The customer bears the costs for this.
This means that the dependency effectively remains in place. For example, anyone who transfers the Mortgage in full to a new provider after three years has already committed to applying the remaining portion—regardless of the terms in effect at that time. In this situation, it is no longer possible to negotiate either the Interest rate or other contractual terms. This is a particularly unfavorable starting point.
Beim Schuldbriefsplitting wird ein bestehender Schuldbrief in mehrere separate Schuldbriefe aufgeteilt. Ziel ist meist, die Finanzierung auf verschiedene Hypothekentranchen oder Kreditgeber aufzuteilen. Ein Schuldbriefsplitting kann die Flexibilität erhöhen, löst jedoch nicht automatisch das Problem einer Abhängigkeit vom bestehenden Kreditgeber. Die konkreten Auswirkungen hängen von den Vertragsbedingungen der Hypothek ab.
We provide truly impartial advice because we are not tied to any specific provider and do not offer our own mortgages. We will only recommend a stepped-rate Mortgage if it truly makes sense for your situation.
Tina Spichtig
Customer Service Representative
A Sensible Alternative
Combining a Fixed-rate Mortgage and SARON
Those who still want to diversify their interest rate risk are often better off with a combination of a fixed-rate mortgage and a SARON mortgage than with several This way, part of the mortgage remains flexible and can be terminated, while the other part provides planning security.
Nevertheless, forward-looking planning is important: Banks may increase the after the . It is therefore advisable to deliberately keep the SARON portion small—ideally to a level where it could be amortized in an emergency. This significantly reduces dependence and preserves the necessary freedom of action.
Long-term fixed-rate mortgages refer to terms of ten years or more. The 10-year fixed-rate mortgage is one of the most popular mortgage loan models in Switzerland. Longer terms are relatively rare. They are often offered by insurance companies on favorable terms. The major drawback is the high cost of early termination of the mortgage. If general interest rates remain low or fall, you’ll end up paying significantly more with a long-term mortgage.
Die Marge bei SARON-Hypotheken ist der feste Zuschlag, den Banken oder andere Kreditgeber auf den SARON-Referenzzinssatz verrechnen. Die effektiven Hypothekarzinsen setzen sich aus dem Compounded SARON und dieser individuellen Marge zusammen. Die Höhe der Marge hängt unter anderem von Bonität, Belehnung und Anbieter, sowie der Verhandlungsstärke des Kreditnehmers ab. Die Saron-Marge ist beim Entscheid Saron-hypothek oder Festhypothek ein wichtiges Kriterium.
The framework term defines the period during which a mortgage must be held with a specific mortgage lender. Within this term, individual tranches or mortgage loan models may be partially adjusted. However, switching to another provider is often only possible to a limited extent—or not at all—during the framework term. The framework term therefore significantly affects the long-term flexibility of a financing arrangement.
Reality
High interest rates are rare in the long term
Historically, interest rates have often risen quickly—but they also frequently fall again relatively quickly. That’s why the risk of “being completely wrong in the long run” is often overestimated. On the contrary: If you take out one mortgage with a five-year term and another with a ten-year term, you run the risk of having to renew both right in the middle of a period of high interest rates. The can indeed be short. In most cases, it makes more sense to have a term difference of only twelve or, at most, 18 months.
Many people try to time the perfect moment to take out a mortgage. However, the right strategy is far more important: Those who consistently compare options, negotiate effectively, and play multiple providers off against each other will get significantly better terms than someone who simply waits for the ideal interest rate.
Der Zinszyklus beschreibt die langfristige Entwicklung des allgemeinen Zinsniveaus. Typischerweise wechseln sich Phasen steigender, fallender und stabiler Zinsen ab. Der Zinszyklus wird unter anderem von Inflation, Wirtschaftswachstum, Geldpolitik der SNB und den Erwartungen der Finanzmärkte beeinflusst. Wer den Zinszyklus versteht, kann Hypothekarzinsen besser einordnen und fundiertere Entscheidungen bei der Wahl von Laufzeiten und Hypothekarmodelle treffen.
Media Roundup
Relevant articles on the topic in Swiss media
Exception
Sometimes a tiered structure makes sense
There are situations in which a staggered structure can make perfect sense—for example, if a future is planned, or if there are multiple properties where the staggering is spread across different properties or an entire .
In most cases, however, a tiered structure is not recommended
Amortisation der Hypothek
Amortisation bedeutet die Rückzahlung der Hypothekarschuld. Sie kann direkt an den Kreditgeber oder indirekt über verpfändete Vermögenswerte wie z.B. die Säule 3a erfolgen und beeinflusst Zinskosten, Steuern und finanzielle Flexibilität. Hier gibt es mehr Informationen dazu: Direkte versus indirekte Amortisation,optimale Hypothekarhöhe,erste und zweite Hypothek erklärt,Hypothek amortisieren bei der Pensionierung
The mortgage portfolio refers to the totality of all mortgages issued by a mortgage lender, such as a bank, insurance company, or Pension fund. It encompasses various types of mortgages, terms, interest rates, and real estate financing, and is an important component of a mortgage lender’s investment strategy and risk management. HYPOTHEKE.ch can help mortgage lenders actively manage their mortgage portfolios.
Conclusion
Only restructure a Mortgage with a clear strategy.
The tiered structure of mortgages often sounds more attractive than it is in practice.
The key issue: flexibility and bargaining power are usually lost in the process. If you want to secure favorable terms in the long run, you’re usually better off with a simple, clearly structured Mortgage—one that’s transparent and allows you to switch providers.
Less complexity means more flexibility.
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