In a first step, the client tried to convince the bank to continue the mortgage until it expired in about one and a half years, despite her moving abroad. Her son, who was of age, remained living in the house and could have taken the necessary actions in connection with the mortgage on behalf of the client by virtue of a power of attorney. The bank, which only operates regionally, rejected the client’s proposal and insisted on the early repayment of the fixed-rate mortgage. The client immediately looked for and found another financing solution and complied with the bank’s request for early repayment. However, she was not prepared to pay an early repayment penalty and to repay the interest subsidies she had received as a new customer of the bank.

The Ombudsman explained to the client that the bank could only demand early repayment of the fixed-rate mortgage if it was entitled to do so on the basis of the applicable contract, i.e. if the client realised an extraordinary reason for termination by moving abroad. He therefore asked the client to provide him with a copy of the mortgage contract and any general provisions relating to it. In the Ombudsman’s view, none of the contractually agreed extraordinary grounds for termination were applicable to the case. A loan can also be terminated prematurely for so-called good cause. What constitutes good cause in this sense is a matter for the discretion of the judge in the event of a dispute. The decisive factor is whether the continuation of the contract is intolerable under the principle of good faith for the party invoking the good cause. In the case of a loan against payment, the requirements are high. In the present case, according to the Ombudsman’s assessment, a judge would very likely have come to the conclusion, in view of all the circumstances, that the continuation of the loan until its ordinary expiry would have been tolerable for the bank.

After the Ombudsman had contacted the bank and confronted it with these considerations, it offered to halve its claim again to CHF 2,000. It was of the opinion that some compensation was justified because the client had now been able to take out financing that was more favourable for her due to the lower interest rates. As the Ombudsman considered that the bank should not have demanded early repayment, he could not recommend that the client accept the settlement offer reduced to this amount. The bank finally accepted this and waived the early repayment penalty and the recovery of the interest subsidy altogether.