By staggering your terms correctly, you can reduce the risk of your mortgage extension happening when interest rates are high.
Structuring Your Mortgage
Experience shows that interest rates periodically fluctuate between high and low. Since it is impossible to predict developments in the interest rate cycle accurately, it is advisable to divide your total mortgage into several tranches with different terms. This reduces the risk that your entire mortgage will be up for extension at a time when interest rates are high. This is the best way to "tunnel beneath" the peak interest rates (see figure below).
Expert Advice on Structuring Your Mortgage Correctly
Your personal risk profile plays a key role in your decision on how to divide up your mortgage and stagger the terms. The combination of tranche amount and term should correspond to the risk that you can and want to take. The financing specialists at Credit Suisse will be glad to advise you on the best way to structure your mortgage.