Timing: A Key Factor Often Underestimated
In mortgage refinancing, timing is just as important as choosing your lender or mortgage type. Acting at the right moment can make the difference between significant savings and a missed opportunity.
Factors That Determine the Right Moment
1. Your Current Mortgage Maturity Date
The most obvious time to refinance is as your maturity date approaches. But "approaches" does not mean "a few weeks before" — it means 12 to 18 months in advance.
This timeframe allows you to:
- Analyse the market calmly
- Obtain several comparative offers
- Switch lenders if necessary (4 to 8 weeks required)
- Negotiate with your current bank from a position of strength
2. The Interest Rate Environment
Mortgage rates evolve based on decisions by the Swiss National Bank (SNB) and international market conditions. Refinancing before an anticipated rate increase allows you to "lock in" advantageous terms over a longer period.
Conversely, if rates are falling, choosing a shorter term or a SARON rate may be preferable to benefit from the trend. SNB decisions have a direct impact on mortgage rate movements.
3. Your Personal Situation
Certain life events create refinancing opportunities:
- Significant income increase (improved risk profile)
- Partial mortgage repayment (better loan-to-value ratio)
- Property improvements that have increased the asset's value
- Approaching retirement requiring mortgage restructuring
- Divorce or separation leading to property changes
4. Refinancing Before Maturity
In some cases, it may be wise to refinance before maturity, despite early repayment penalties. This applies when:
- Interest rates have fallen significantly since the original agreement
- The penalty is offset by future savings
- You have a project requiring restructuring (sale, major works)
- You wish to optimise your amortisation strategy
The Break-Even Calculation
Before refinancing before maturity, calculate the break-even point: when do savings on the new rate compensate for early repayment penalties?
Simplified formula: Early repayment penalty ÷ (annual savings on new rate) = number of years to break even
If the break-even is shorter than the remaining contract duration, early refinancing can be worthwhile.