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Reader's question
Living & property

Can just one tranche be switched?

A house that was just built stands on the green lawn.
Many homeowners divide their mortgage up into various tranches. Mortgage expert Stéphane Meusy knows whether it is possible to switch part of a mortgage.
I have concluded various mortgage tranches with the same bank for my owner-occupied home. Now I would like to switch one tranche to Helvetia. Is that possible?
Asked by Patrick K., Wiesendangen 30.06.2017

Stéphane Meusy
Stéphane Meusy, Sector Head Mortgages
Basel 07.07.2017

Dear Mr K.,

Just like you, many homeowners divide their mortgage up into various tranches or sub-mortgages. The advantage of this is that various mortgage models can be concluded for different amounts.

However, if you have concluded several sub-mortgages, you can only switch the entire mortgage debt to Helvetia, not just one tranche. The reason for this is that a mortgage is secured by a property lien. This means that the property serves as security for the respective holder of the property lien – in this case the provider of your mortgage. Should, for example, compulsory liquidation of the property occur, the mortgage would be settled first from the sales revenue. If various providers are responsible for mortgaging an owner-occupied home, in some circumstances it might not be possible to pay all providers. Different ranks apply in this respect. In the event of compulsory liquidation, a bank or insurance company in the second rank would only receive what was left after the repayment of debt arising within the first rank. Generally speaking, no mortgage creditor wants to enter into such risk.

If you have two or more mortgages with different terms and want to switch to Helvetia, you must convert the mortgage with the shortest term into a variable mortgage when it expires, or into a fixed mortgage whose term ends at the same time as the longest mortgage tranche. Only then can you switch the entire mortgage debt to Helvetia. You can begin to plan twelve months before a possible switch and so benefit from lower interest rates.
 

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