A fixed-rate mortgage reaches its term — and many owners only deal with it in the last month, when all that is left is to sign whatever their bank offers. This is the most expensive mistake in the life of a loan: renewal is the moment when everything can be renegotiated, provided you start early.
The timetable: 12 to 24 months before the term
Serious preparations begin one to two years before the term. Banks allow you to reserve a fixed rate in advance — this is the so-called “forward” mortgage: you lock in tomorrow’s conditions today. Cover generally runs up to twelve months before the loan’s start date, exceptionally eighteen to twenty-four. Waiting until the last quarter means negotiating without any credible alternative, and the bank knows it.
The forward rate is not free — and it’s invisible
Reserving a rate is paid for through a forward premium. The trap lies in its form: in most cases, it does not appear as a separate fee but is built into the rate, spread over the entire term of the loan. So you receive no invoice — you simply sign a rate slightly higher than the one displayed today, without necessarily seeing what the difference is made of.
This premium grows with the lead time: the further ahead the reservation, the heavier the premium. Hence a simple decision rule, and the only one that matters: reserving early is only worthwhile if you believe rates will rise by more than the premium charged. So have both figures calculated — the forward rate and today’s rate — and compare the gap, not the intentions. A bank that refuses to name its premium is already telling you something.
Taking stock before choosing
A renewal is not simply a continuation of the past: it is a new loan, to be adapted to your current situation. Three questions to settle first:
- Your upcoming expenses — children’s education, renovation, a second property: the renewal date is the right moment to adjust the amount, within the limit of your cédule;
- your time horizon — a sale planned within three years rules out a ten-year fixed rate, unless you are prepared to pay the exit penalty;
- your tax situation — interest remains deductible until the end of 2028; the imputed rental value reform removes this deduction from 2029, which will reshuffle the trade-off between amortising and keeping the debt.
Fixed or SARON, at the time of renewal
A fixed rate buys predictability; SARON tracks the money market, historically cheaper on average but without any guarantee. Many Geneva owners mix the two — two tranches, two maturities — so as never to renew the entire loan at the worst possible moment. All three forms are compared in our mortgage guide.
What the bank reassesses at renewal
Renewal is not automatic: the institution redoes its calculations. It checks that the theoretical charge — rate at 5%, amortisation, upkeep — still fits within a third of your income, which can come as a surprise to a household that has retired in the meantime: same walls, same debt, but lower income can cause the test to fail. It may also re-examine the value of the property. Anticipating these checks is precisely what the 12-to-24-month timetable allows — time to amortise a little, document the value, or look for an institution whose criteria suit you better.
Exiting before the term: the penalty
Breaking a fixed rate before its term triggers a charge — the bank recovers the interest it loses, and the bill can be heavy when rates have fallen since signing. This is why the term of the rate should be aligned with your actual time horizon: a sale planned in three years and a ten-year fixed rate do not go well together. In the event of a sale, an alternative to the penalty sometimes exists: transferring the mortgage to the next property, to be negotiated with the institution.
Doing nothing is a decision, and the most expensive one
When a fixed rate reaches its term, the rate must be reset. If you say nothing, the contract does not simply continue unchanged: depending on your bank’s conditions, the tranche most often switches to a variable rate, the most flexible form — and the most expensive. It has no fixed term or duration, it follows the market, and nothing warns you that it costs you more than a newly negotiated tranche.
Silence is therefore not neutral: it is a default choice, made by the bank, on the bank’s terms. Read what your contract provides for at term — the clause takes up three lines and is found in the special conditions — then note the renewal date two years in advance, not two months.
Compare, then negotiate — for real
The Geneva market is competitive and the differences between institutions are real. The method:
- request offers from several banks, including online providers — your current bank’s offer is only a starting point;
- negotiate beyond the rate: file fees, amortisation conditions, exit flexibility;
- be genuinely ready to change institution — it is this credibility that moves the conditions; include transfer costs in the comparison;
- work out each scenario with our mortgage calculator before committing.
In practice, in Geneva
Renewal is also the occasion to rethink amortisation — direct or indirect — and, if the property’s value has risen, to have your rate reassessed in advance: a valuation based on actual transactions documents this value for the bank. Our brokers know the practices of the institutions in the market — talk to us about your renewal, the conversation is confidential. Technical terms are defined in the glossary.