“Considering Splitting Your Mortgage Debt? Advantages and Disadvantages to Know”

Borrowers who take out a single-term mortgage are exposing themselves to a high degree of risk. If there is an unexpected interest rate trend, the entire mortgage amount has been incorrectly calculated. The interest burden can quickly skyrocket and get the borrowers into trouble.

If interest rates rise by just two percent, this can already mean an additional burden of CHF 1,250 per month for CHF 750,000.

That’s why more and more people are choosing to split mortgage debt. Those who take out mortgages with multiple maturities benefit from additional flexibility, but also have potential disadvantages.

Loans with several terms in finance are particularly useful for larger loan amounts. Smaller loan amounts often offer bad conditions when splitting the mortgage debt.

In addition, if there are several mortgage tranches, it is usually not easy to change the bank. The negotiating position vis-à-vis the financial institution is weakened and borrowers sometimes have to make do with a poorer offer.

Many banks also have special requirements for splitting and want to take over all mortgages after a certain period of time.

Multi-maturity loans can be attractive. Resourceful banks therefore lure with cheap offers. However, these can later turn out to be expensive, since higher margins are due when the individual tranches are renewed.

However, if the individual maturities are replaced one after the other, the promissory notes must also be adjusted in each case, which results in high land register fees.