• A mortgage is the borrowed capital that you need to buy a property.
• You need at least 20% equity to finance your own home. 
• With the first mortgage, you finance the first 65% of the property value. The second mortgage finances the rest.
• On the mortgage, you pay the annual lender interest, the so-called mortgage interest.
• The running costs of home financing should not be more than 33% of your income.
• In order to pay off the mortgage, indirect amortization via life insurance can make sense.

A little house with lots of space to run around. Or the top floor with a panoramic view. No matter what your dream of owning your own home looks like: You have to find the right financing for it. But how does a mortgage actually work? And what is the mortgage interest? You can find out more about this here.

What is a mortgage?

In order to be able to buy a property, you not only need equity. But usually also borrowed capital. This is called a mortgage loan – or simply a mortgage. A lien on your home serves as security for the lender – usually a bank.

How much equity do I need for a mortgage?

In order to take out a mortgage and finance a condominium or house purchase, you need at least 20% equity. With an assumed purchase price of CHF 800,000, this is CHF 160,000. Only a few people have that much money immediately available. In order to get closer to the dream of your own four walls, it is, therefore, advisable to do so in good time to save wealth.

GOOD TO KNOW

As a rule, a maximum of 10% of the purchase price from the credit of the2nd pillar come. You can save a further 10% of the purchase price, for example, through savings, gifts, and the purchase of money saved from the3rd pillar of finance. You have to take out a mortgage to cover the remaining 80% of the home financing.

How do the first and second mortgages work?

To finance a home of your own, you usually need a first and a second mortgage. The first mortgage finances the first 65% of the property value. The second mortgage covers the remaining financing needs. And a maximum of another 15% of the property value. The second mortgage usually has to be paid off within 15 years or by the time you retire at the latest.

What types of mortgages are there?

A distinction is usually made between fixed-rate mortgages, variable mortgages, and money market mortgages. All models have their own peculiarities and advantages, and disadvantages. For example, while the interest rate on a fixed-rate mortgage is fixed for the entire term, it fluctuates on a variable and money market mortgage. This makes planning the cost of home equity difficult. 

In addition, fixed-rate mortgages and money market mortgages are limited to a fixed term, but variable mortgages are not. This makes them particularly interesting for anyone who wants to remain flexible and possibly want to sell their property soon. In addition to your personal situation, the current market environment also determines which mortgage is right for you.

  Mortgages finance your own home – we explain how it works. 

What is the mortgage rate?

Mortgage interest, or mortgage interest, is the amount the lender charges for the borrowed money. He has to be paid regularly. In the case of variable-rate mortgages, the mortgage interest rate depends on the current mortgage interest rate. Interest rates are just as volatile as the capital market. For this reason, they are regularly updated by mortgage lenders. 

How much do I have to earn to finance an apartment or house?

The rule of thumb is that 33% of your gross income needs to be factored in to cover all property costs. The annual costs of financing a property are usually made up of:

• The mortgage interest is calculated at 5% of the mortgage loan. This ensures the financing of your own home even in times of rising interest rates;
• amortization, i.e., repayment of the second mortgage;
• Additional costs of 1% of the purchase price per year.

What options do I have to pay off the mortgage?

In the direct amortization, repay the silent second mortgage loan to the lender in pre-determined tranches. You can also invest the repayment of your mortgage in your retirement provision. For example, you have the option of converting the annual amortization amount into alife insurance to pay in. With this so-called indirect amortization, you benefit from tax advantages and insurance cover for the entire term of the policy.

How do I find the right home financing?

Buying a property is a life-changing decision. And for many, a tour de force that should not be underestimated. This requires enough time and tranquility to find the right property and secure suitable real estate financing. 

Your advisor will be happy to help you make your dream of owning your own home come true. We accompany you on your way to home financing and provide you with an experienced cooperation partner who will clarify all important questions for you.