When concluding mortgages, the fine print in the general terms and conditions and the clauses in the loan agreement should be read particularly carefully before signing the agreement. Save yourself unnecessary trouble – these contractual provisions can be interpreted adversely for consumers.
The loan agreement contains any clauses that are unfavorable to the borrower. Pay particular attention to broad and very open formulations, because their interpretation can be disadvantageous for the borrower. Whether the banks would be right in court is still unclear, because there are few precedents.
Interest rate increases for fixed-rate mortgages due to regulatory measures
Of great relevance is the fact that some financial institutions provide for the possibility in the loan agreement to implement mortgage rate increases for existing fixed-rate mortgages if, for example, regulatory measures by the supervisory authorities (Finma, Federal Council, SNB) result in higher capital requirements and this leads to higher costs. It is not yet clear whether banks and insurance companies will make use of this right to pass on the costs of the capital buffer activated by the Federal Council in 2013 to their customers – as far as we know, no institution has yet done so (as of July 2013).
Decrease in the value of the property: extraordinary right of termination
The financial institutions often grant themselves an extraordinary right of termination in the loan agreement in the event of a reduction in the value of the property. However, this clause should only apply if there are significant value impairments – and not already in the case of minor fluctuations.
Notice periods
Cancellation periods of 3 or 6 months are common: If the fixed-rate mortgage is not cancelled in time, it is automatically converted into a variable-rate mortgage – which in turn is subject to a cancellation period of 3 to 6 months. By the way, framework agreements for Libor mortgages (also known as money market mortgages) generally include framework terms of 2 or 3 years, for which early exit is generally not possible, or. costs a lot of money.
Securitization clause
The so-called securitization clause is often found in the loan agreement. The lender can therefore securitize the mortgage and resell it as a security on the financial market to third parties. This allows the bank to refinance more favorably. This clause is particularly problematic when the financial institution also provides the customer data.
Periodicity of mortgage interest payments
In loan agreements, mortgage interest payments are usually due quarterly. This leads to the fact that the interest costs are slightly higher overall. In return, the bank pays interest on savings only semi-annually or even annually. Interest rate dates, which are set semi-annually or even annually, are beneficial here.
Indirect amortization via in-house products
Often requires indirect amortization through in-house 3a products – this is especially detrimental if the interest rate on these products is worse than your competition.
Asymmetrical right of set-off
Particular attention should be paid to the right of set-off. In this case, the lender grants itself the right to offset its claims against the credit balances in the event of the customer's insolvency. However, in the reverse case, customers are often supposed to waive the right to offset under the terms of the loan agreement.
Early exit from the mortgage
If the mortgage is terminated by the customer before expiry, the loan agreement can only be cancelled by compensating the contracting party. This prepayment penalty can be in favor of the bank or in favor of the customer, depending on the case. Now, this is often handled contradictorily in the loan agreement – on the one hand, the customer must compensate the bank in the event of a loss of interest, but on the other hand, certain financial institutions do not provide for compensation in favor of the customer in the event of an interest advantage.