The mortgage when selling: repay, have it taken over or take it with you
Most houses are encumbered with a mortgage. Anyone selling has to settle it – and depending on how, this costs several thousand francs or nothing at all. This guide shows the three options and their consequences.
In brief
- Repayment: the bank is repaid from the proceeds – with fixed-rate mortgages an early repayment penalty looms
- Takeover: the buyer takes over the mortgage if the bank agrees
- Transfer (change of property): you take your fixed-rate mortgage, including rate and term, to the new home – without penalty
- Talk to the bank early – ideally before marketing
The three options
With SARON or variable mortgages, repayment at short notice is no problem. It is different with fixed-rate mortgages: they run until a fixed date. Anyone exiting earlier pays the bank the interest difference for the remaining term – the early repayment penalty. With low market rates and a long remaining term, this can reach five figures.
1. Repayment from the sale proceeds
- The notary transfers the outstanding amount to the bank directly from the purchase price
- Variable and SARON mortgages: notice period usually 3 to 6 months, no penalty
- Fixed-rate mortgages: early repayment penalty = (agreed rate − current reinvestment rate) × remaining term × amount, plus processing fee
- The penalty is partly deductible as investment costs for the property gains tax – we check this
2. Takeover by the buyer
The buyer can take over your existing mortgage if the bank accepts them as debtor (affordability, equity). For you the penalty is waived; for the buyer a low old rate can be attractive – or a high old rate a deterrent. In practice, takeovers occur mainly within the family.
3. Transfer to the new property (mortgage transfer)
If you buy a new home, you can usually transfer your fixed-rate mortgage to the new property: the interest rate and remaining term stay the same, and no early repayment penalty is due. For this, the bank reassesses the new property (loan-to-value) and your affordability. If the new mortgage is higher, the additional amount is taken up as a new tranche at current conditions; if it is lower, the remainder is repaid – with some banks without, with others with a proportional penalty.
Whenever your old rate is lower than today’s rates – then you save twice: no penalty and a favourable rate on the new house. If the old rate is higher, repayment with penalty may still be cheaper. We calculate both variants for you.
Mortgage notes: cancel or transfer
The mortgage is secured in the land register by mortgage notes. On sale, they are cancelled, transferred to the buyer or re-registered on your new property. Creating a new mortgage note costs CHF 350–1,500 (notary and land registry); transferring existing mortgage notes to the buyer is therefore often the cheapest solution for both sides.
How to proceed
- Before marketing: check the mortgage contract – term, notice period, conditions for transfer
- Inform the bank and request a quote for all three variants
- When buying a replacement property: apply for the transfer early
- Roman Frey, our financial adviser, compares the variants and negotiates with the bank
Questions on this topic.
How high is the early repayment penalty?
It depends on the remaining term, amount and interest difference.
- Example: CHF 500,000 at 2.0 %, remaining term 4 years, reinvestment rate 1.0 % → around CHF 20,000
- With rising interest rates the penalty can fall to zero
- Some banks even pay something back if the difference is positive – ask
Can I transfer the mortgage to an investment property?
Usually yes, but the bank reassesses the property and affordability.
- Stricter lending rules apply to investment properties (max. 75 %, amortisation to 2/3 within 10 years)
Do I have to inform the bank before the sale?
Yes – as early as possible.
- The bank is the creditor and must approve the cancellation or transfer of the mortgage notes
- Without its cooperation the notary cannot process the purchase price
Plan mortgage and sale together?
We compare repayment, takeover and transfer – and negotiate with your bank.
Let’s talk about your property.
Call or write to us – reply within 24 hours.
ImmoBilà GmbH · Schneckelerstrasse 1, 4414 Füllinsdorf
info@immobila.swiss · Mon–Fri 8:00–12:00, 13:30–17:30