Glossary of properties and mortgages

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Simple explanations of key terms relating to property finance: from A to Z

Terms are often used in relation to property and property finance which are not immediately obvious to most prospective property buyers. With this in mind, this page contains a helpful list of definitions of various terms associated with house buying – your own personal dictionary, so to speak. You can refer to this as required if you come across any technical term you are unsure about on your journey towards your own home.

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A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

Amortisation
Amortisation is the complete or partial repayment of the mortgage. Typically, amortisation runs parallel to any interest payments. In general, two-thirds of the mortgage must be amortised within a maximum of 15 years, but no later than retirement age (64 for women, 65 for men). For more information, please refer to the entries for direct/indirect amortisation.


Additional securities
Examples of additional securities in the context of a mortgage include funds from the 2nd and 3rd pillar. If these are pledged as additional securities, a higher lending level is possible instead of the standard 80%.


Affordability
Affordability refers to how the ongoing costs of finance or those of owning their own home compare with the mortgage holder’s gross household income. Most financial institutions stipulate that these costs must not exceed 33% of gross household income.


Affordability calculator
An online affordability calculator allows you to calculate whether you meet the affordability criteria for buying your dream property. Take advantage now of this quick and easy way to calculate what you can afford with our affordability calculator.


Additional lending
Ordinarily, financial institutions will finance up to 80% of a property with a mortgage, although lending in excess of 80% is also possible if additional securities are pledged in the form of assets from the 2nd or 3rd pillar.


Ancillary costs
The ancillary costs which feed into affordability calculations are those incurred in addition to any mortgage interest. These include things like the costs of water, power, and heating. Together with maintenance costs, costs equivalent to 1% of the value of the immovable property are normally factored in for each year.


B

Building loan
A building loan is required to finance a building project or renovate an existing immovable property. It only serves as a temporary source of finance and is converted into a mortgage once the work is complete. The banks sets a maximum limit equivalent to the level of the building loan limit. If a new-build property is planned, the building loan may only be used once the building owner’s own funds have been used up.


Bearer mortgage certificate
The bearer mortgage certificate is issued in favour of the respective bearer of the mortgage certificate. It may – unlike the registered mortgage certificate – be transferred by means of a simple handover.


Buildings insurance
Compulsory buildings insurance essentially covers everything permanently associated with the building. As a rule of thumb, if you were to turn a house upside down, anything which falls out is covered under contents insurance and everything else under buildings insurance.


Building owner's liability insurance
Anyone having a building constructed or renovated is liable for any personal injury or damage to property caused by the construction work involved. The insurance is based on strict liability. This includes the policyholder's liability, even in cases where they themselves may not be at fault (e.g. in the event of a crack in the wall of a neighbouring building, water contamination through the work undertaken, etc.). Liability insurance covers any compensation for those suffering loss or damage and the owner's defence against unjustified claims.


Building zone
In principle, any building work in Switzerland may only take place within building zones. Building zones are areas which may be built upon in accordance with municipal provisions regarding building work and use. Their surface area is determined by the building plan. Beyond the building zone, only agricultural buildings and those specific to the relevant location are permissible in Switzerland. The first stage of the revision of the Spatial Planning Act (SPA 1) came into effect on 01.05.2014. Since then, the building zone moratorium, as defined in the transitional provisions associated with the SPA, has helped ensure that hardly any new building zones have been created. Building zone statistics are collated and updated every 5 years.


Beneficial use
Beneficial use is the right to treat a piece of landed property or an immovable property as if one owned it, despite this not being the case. It may therefore be used as the beneficiary sees fit, while the owner is only left with ownership rights for the duration of the period of beneficial use. Beneficial use arrangements are recorded in the land register.


Bidding process
The bidding process offers an interesting alternative for those looking to sell a house. Particularly in large urban areas where demand is high, this is a potential way of achieving a higher sale price than simply offering the property for sale at a fixed price. Unlike foreclosures, there is no obligation with the bidding process to insist on a minimum offer and no obligation to sell.


C

Cap
Cap refers to an upper interest limit negotiated between debtor and creditor for liabilities subject to variable interest (Libor mortgage). The premium for the Libor mortgage with interest rate hedging is often relatively expensive, however, and is therefore only worthwhile for more extensive finance arrangements.


Charge arrangement/security
In the case of direct mortgage business based on a mortgage certificate, the creditor or lender receives the mortgage certificate as a charge (on the property) and becomes the owner of the title with full rights. So direct mortgage business consists of two contracts, namely the loan agreement and the mortgage certificate.


Credit
Credit or loan refers to sums of money lent out for a specified term and at a given rate of (lending) interest. Credit may be granted in return for some form of security or on an unsecured basis.


Cubic volume
The volume of a house is given in cubic metres. This is mainly relevant for the purposes of buildings insurance, which tends to define the insurable value of the house on the basis of the cubic volume.


Commercial value / Commercial value estimation
Commercial value refers to the sale price a property is likely to be able to command on the market. The commercial value of a property is determined via the so-called commercial value estimation, i.e a property valuation.


Co-ownership
Co-ownership is a form of ownership where an immovable property is owned by two or more owners. If the immovable property is under co-ownership, the ownership shares of each person are recorded in the land register. Each co-owner is free to dispose of their share and sell it without the consent of the other co-owners.


Condominium
Condominium is a particular form of co-ownership. When purchasing something as part of a condominium arrangement, the buyer acquires a specific share in a piece of landed property or a building. The condominium owner must also share in the common costs.


Condominium association
Anyone acquiring part of a condominium arrangement will automatically become part of the condominium association. The job of this association is to manage the common shares. To this end, regular reserves are paid in to so-called renovation funds.


Cadastral number/plan
The cadastral plan is the graphic representation – to scale – of landed property in the cadastre. The cadastre records and represents all landed property according to its location, type of use, size, etc. Each piece of landed property is given a cadastral number.


Contents insurance
Contents insurance covers loss or damage associated with fire, mains water, and storms/hail as well as burglary, robbery, and vandalism following a break-in and can be topped up as the individual sees fit. Although not compulsory in Switzerland, it is strongly recommended.


Construction insurance
This is a form of comprehensive insurance which covers any loss or damage resulting from a construction-related accident arising in connection with properties under construction. Also covered is any theft of items already associated with the property under construction.


D

Direct amortisation
Direct amortisation describes a situation where you pay the mortgage in regular instalments. The mortgage debt is continually reduced, while the tax burden increases on account of the debt reducing (see indirect amortisation).


E

Extension of a mortgage
When a mortgage is nearing the end of its term, it can either be replaced by another provider or extended with the current provider. It makes sense to compare terms and conditions and negotiate with the provider.


F

Family mortgage
Some financial institutions offer family mortgages with reduced interest rates over a certain period such as 3 years. It is a kind of welcome bonus. The discount is mostly only granted on the first mortgage.


Frozen account
A frozen account is an account where any balance only becomes available after a specific freeze period has elapsed. In the event of any interest income on the account balance, this is treated as taxable income from assets, even if the freeze period has yet to elapse.


First mortgage
The first mortgage is only granted up to a certain proportion of the commercial value of a property. Depending on the provider, the lending limit will be somewhere between 65 and 70%. There is no limit in principle to the term of the first mortgage, and unlike the second mortgage it does not have to be repaid after a set number of years. For more information, please refer to the entry for ‘Second mortgage’.


Fixed-rate mortgage
With a fixed-rate mortgage, an interest rate is agreed which remains unchanged throughout the term of the mortgage. It offers a great deal of certainty from a planning perspective. The most commonly available fixed-rate mortgages on the market have terms between 2 and 10 years, although longer terms are possible too. While it is true that mortgage holders will not benefit from any reduction in interest rates, they will not incur any additional costs either if interest rates rise.


If a mortgage agreement expires, it is necessary to arrange some kind of follow-on finance arrangement, i.e. extension of the mortgage. It is important to think about replacing the mortgage around 18 to 24 months before the end of the term of the current mortgage agreement. These are the questions which need to be answered in this regard:

  • Are you interested in one-off amortisation or is there any renovation or conversion work imminent?
  • What level of credit will you need in future?
  • With what kind of product (fixed-rate, Libor, or variable-rate mortgage) are you looking to replace your mortgage?
  • What kind of terms (i.e. periods) suit your needs and your general situation?


Finance confirmation/Finance commitment
In a finance confirmation, a financial institution provides an assurance that it has reviewed the financing of an investment project and is prepared in principle to offer credit. The review covers any own capital available, any data regarding the property, and any relevant documentation for finance purposes. A finance confirmation has no legal value. Both the financial institution and the borrower may still reject the credit agreement.


Forms of ownership
Three forms of ownership are recognised under Swiss law: sole ownership, co-ownership, and joint ownership. The form of ownership is recorded in the land register. For more information, please refer to the relevant entries.


Floor
With an interest floor, the buyer receives a payment at the end of each period during which the agreed reference interest rate falls below the agreed base rate.


Forward mortgage
A forward mortgage allows mortgage holders to set favourable terms, up to 24 months in advance, for future mortgage loans. Some providers insist on a fee for this.


G

General contractor
The general contractor (GC) undertakes to carry out contractually agreed construction work in its entirety. Vis-à-vis the building owner, the general contractor is a contractual partner responsible for creating the building in accordance with the building owner’s plans. The general contractor may delegate individual services under the contract to third parties (subcontractors).


Gross floor space
The gross floor space refers to the total area covered by all floor space above and below ground including the cross sections of external and internal walls.


Gross living space
The gross living space includes all spaces within the residence (living areas, ancillary areas, hallways/landings, stairs) plus the cross sections of external walls. It does not, however, include any outside spaces such as staircases, terraces, or open balconies as well as uninhabitable cellars or attics.


H

Holiday home/Holiday residence
The financing of holiday properties is subject to different provisions than those applicable to mortgages on a person's own home: because holiday properties are generally sold more quickly if money becomes tight, most mortgage providers apply stricter rules. Most financial institutions demand an own capital contribution of 30 to 50%. Any use of money from the 2nd or 3rd pillar is also strictly forbidden by law.


I

Imputed interest rate
An imputed interest rate, of 5% in most cases, is used to calculate affordability. This interest rate is an historical average and is intended to ensure that borrowers can still afford the mortgage if interest rates rise.


Investment property
An investment property is understood to mean property acquired for investment purposes. This kind of investment offers the possibility of a steady and reliable return and will ideally generate a regular profit. The premises are often rented out.


Income protection insurance
Income protection insurance (also known as permanent health insurance) kicks in when someone becomes unable to work due to an accident and/or illness. It is paid out in the form of a regular income and helps people maintain their previous standard of living and avoid getting into debt. The level of any income depends on the degree of incapacity and is paid out from an incapacity level of 25%.


Irrevocable undertaking to pay
An irrevocable undertaking to pay ensures that the respective financial institution transfers the purchase amount to the seller at the contractually agreed time. The irrevocable undertaking to pay must be presented to the notary or the land registrar and handed over to the seller no later than the time of signing – but ideally before this.


Interest rate
The interest rate is the price, expressed in percentage terms, which must be paid for the capital lent. In the case of a mortgage, this is the mortgage interest rate. With a fixed-rate mortgage, the mortgage interest rate remains the same throughout the term, while the interest rate for money market mortgages is constantly adjusted to reflect the situation on the markets.


Interest expense
The interest expense, as opposed to the interest rate expressed as a percentage, is the actual expense in Swiss francs which must be paid out for the capital lent, e.g. in connection with a mortgage to finance a property.


Interest rate forecast
An interest rate forecast is the attempt to come up with a forecast for future mortgage interest trends, taking all relevant factors into account. MoneyPark publishes an interest rate forecast on a monthly basis, which you can receive by email if you register for our newsletter.


Interest rate reversal
An Interest rate reversaloccurs when the central banks increase interest rates again after a long period of lower rates.


Investing money
Investing money is about creating value from your own assets. This may take the form of shares, debentures, or bonds which confer an entitlement to interest payments. Other investment options include custody accounts for securities and also investment funds.


Indirect amortisation
With this arrangement, repayment is made via a product associated with pillar 3a, which is also pledged as additional security. This means the mortgage amount does not get any smaller during the term. At the end of the term, the 3rd pillar is used to amortise the mortgage. This form of amortisation has tax advantages as payments to pillar 3a enjoy favourable tax treatment.


J

Joint ownership
With this form of ownership, the owners are either joint owners by virtue of a contract (e.g. a marriage contract or simple partnership) or by law (mostly through a community of heirs) – regardless of who has invested what money in the property. What counts is the broader relationship such as the marriage contract. The relationship determines the respective shares in the property. With joint ownership, the partners are not free to dispose of their shares: any decisions regarding, say, a sale of the property must be taken jointly.


K

L

Life insurance
This is an insurance policy for a specific sum to be paid out in the event of death to the insured person’s surviving dependants or to the insured person themselves if they survive the term.


Liability insurance
Liability insurance protects the insured persons in the event of them causing other persons or property to suffer loss or damage. The principle is based on art. 41 of the Swiss Code of Obligations: ‘Anyone who causes another person to suffer loss or damage contrary to the law, whether intentionally or due to negligence, is obliged to make amends accordingly.’ Each person is liable to the full extent of their assets for any such loss or damage. This is why it is important to take out private liability insurance, even if this is not actually compulsory.


Loan
The term loan is used to describe a situation where one person lends money or makes money available to another. In general, the lender receives interest from the borrower, unless the loan is an interest-free one. The terms ‘credit’ and ‘loan’ are used in much the same way in everyday language.


Lending
In general, mortgage lenders finance up to 80% of a property. Higher lending levels are possible, however, if additional securities are pledged. For the purposes of your share from your own funds, you may use account balances, securities, pension assets (2nd and 3rd pillar), or the surrender value of insurance policies as well as advances on inheritances and non-interest-bearing and non-repayable loans. However, at least 10% of the value of the property must be financed with funds not associated with the 2nd pillar.


Landed property
According to art. 655 para. 2 and art. 943 para. 1 of the Swiss Civil Code, the following are regarded as landed property under the law:

  • Immovable properties: geographically limited parts of the earth’s surface encompassing the ground and buildings as well as plants and water sources
  • Individual and permanent rights recorded in the land register, e.g. right to build, right of use, right to spring water, and other easements
  • Co-ownership shares in landed property


Land register
The land register is a public register kept at district level. All landed property and its owners are recorded in the land register.


Lower of cost or market principle
According to the lower of cost or market principle, the financing institution uses the lower of the purchase price or market value for the purposes of determining the commercial value.


Lending calculator
You can use the MoneyPark lending calculator for lending calculations based on your individual situation. Your mortgage expert can help you with this and ensure the level of any lending is right for you.


Libor mortgage
The interest rate for the Libor mortgage is based on the underlying Libor rate (normally applies for 3 months). The mortgage interest rate is adjusted accordingly each quarter to reflect the current Libor rate.


M

Multiple-occupancy dwelling
A multiple-occupancy dwelling is inhabited by more than one party. The residences it contains may be rented out or owned by individuals in the form of a condominium arrangement.


Marginal tax rate
The marginal tax rate indicates how much the tax burden will change if taxable income is increased or reduced by a given amount. Switzerland has a progressive tax system. Those with a higher income pay more tax accordingly, in both absolute and percentage terms.


Maintenance costs
Maintenance costs refer to the costs which have to be incurred for the maintenance of a property. These include both minor expenditure such as for painting walls and also major projects such as renovating a kitchen.


Mortgage
The mortgage is first and foremost the lien over the property. With this, the mortgage loan used to build or buy a property is secured by the property itself. A charge is used for this purpose.


Mortgage broker
A broker is a service provider who organises the sale of an immovable property. In doing so, they come up with an estimate for the property, put together the relevant sales documentation, look for a buyer, and support the buyer and seller throughout the entire process. For doing this, they normally receive broker's commission equivalent to 2 to 3% of the sale price.


Mortgage term
Fixed-rate mortgages may be taken out with terms of anything between one and a maximum of 25 years, depending on the provider. The interest rate agreed does not change during the term.


Mortgage lender/provider
Mortgage lenders include banks, insurance companies, and pension funds. The mortgage lender lends the mortgage holder the money to finance an immovable property. Interest is charged in return for the mortgage provided.


Mortgage model
A basic distinction is made between three mortgage models, namely the fixed-rate mortgage with a fixed interest rate and fixed term (2 to 25 years), the money market mortgage (currently based on Libor, but soon to be replaced by Saron in Switzerland), and the variable-rate mortgage with an unrestricted term and a variable interest rate. The model chosen will largely depend on people’s individual situation.


Mortgage certificate
When a mortgage is issued, a mortgage certificate is drawn up and recorded in the land register. This represents the lien (on the property) which the institution is granted by virtue of issuing the mortgage. The mortgage certificate becomes the property of the institution (see also the entries on bearer and registered mortgage certificate).


Mortgage interest
Mortgage interest refers to the costs incurred for the mortgage loan vis-à-vis the mortgage lender. The level of mortgage interest will depend on the general interest rate, the individual’s financial circumstances, and the negotiating skills of the prospective mortgage holder.


Mortgage calculator
An online mortgage calculator can tell you whether your property dream can actually be financed based on the guidelines for affordability and lending.


Minergie
Minergie is the Swiss energy standard for low-energy housing.


N

Net living space
The net living space, also known as habitable space, refers to the space in a residence or a house which can be put to effective use (as opposed to the gross living space).


New mortgage
New mortgage refers to taking out a mortgage upon buying a property – as opposed to the follow-on finance taken out when an existing mortgage expires.


Notional interest rate
The notional interest rate – or ‘advertised interest rate’ – refers to the mortgage interest rate for a specific term as communicated by an institution. Often, the individual mortgage interest rate is open to further negotiation.


Notary
The notary is responsible for drafting the purchase agreement and arranging subsequent authentication and official certification. They are neutral and therefore under an obligation to both seller and buyer.


O

OASI
OASI is the main pillar of Old Age and Survivors Insurance in Switzerland (1st pillar). It is intended to cover a basic minimum standard of living during old age or in the event of death. A form of social insurance, OASI is compulsory for all.


Own capital/funds
It is normally necessary for a buyer to finance 20% of a property purchase with their own capital. For the purposes of your share, you may use account balances, securities, pension assets (2nd and 3rd pillar), or the surrender value of insurance policies as well as advances on inheritances and non-interest-bearing and non-repayable loans. However, at least 10% of the value of the property must always be financed with funds not associated with the 2nd pillar.


OPA
The Federal Act on Occupational Old Age, Survivors' and Invalidity Pension Provision (OPA) came into effect on 01.01.1985. The OPA defines the minimum requirements for occupational pension provision, which every pension fund in Switzerland must meet for those insured with them.


Official certification
In order for a purchase agreement for property to be valid, it needs to be recognised in writing in the form of official certification. This is intended to ensure that both parties to the agreement are aware of the consequences of the agreement. Also, the land register is trusted by the public – so anything in it is taken as read.


Offer
An offer is a binding proposal from the mortgage lender. It contains confirmation of a specific mortgage amount for a specific property, the mortgage product, and the interest rate offered.


Online mortgage
An online mortgage is understood to mean a mortgage taken out without the client and advisor meeting in person any more. Instead the entire transaction is conducted online or over the telephone.


Online mortgage extension
An online mortgage extension is understood to mean the extension of a mortgage where the client and advisor no longer meet in person but conduct the entire transaction online or over the telephone.


P

Property valuation
The mortgage lender comes up with an estimated valuation of the immovable property, independently of the purchase price. This estimate serves as the basis for calculating lending and affordability.


Pledging of 2nd pillar / 3rd pillar
The financing of a property may involve the pledging of assets from the 2nd and 3rd pillar. This provides the financial institution with additional security and enables higher lending than the standard 80%.


Prepayment penalty
Prepayment penalty refers to the penalty payment a mortgage borrower has to pay their financial institution if they cancel a mortgage before the term defined in the agreement expires.


Property value
The property value or commercial value is the effective value of the property. This may not be the same as the purchase price.


Pension
The term pension refers to income after retirement. Pension normally consists of payments from OASI (1st pillar), the pension fund (2nd pillar), and any insurance policies.


Purchase price
The purchase price refers to the amount agreed between the buyer and seller.


Purchase agreement
The purchase agreement governs all the details of a property sale and the relationship between buyer and seller. A purchase agreement for a property needs to be authenticated by a notary and requires some form of official certification. The effective transfer of ownership for the property may take place at the same time as or following official certification.


Pension provision
Pension provision is understood to mean the financial resources set aside to provide security for the insured person and their family in the case of specific events such as incapacity or death. MoneyPark will find the optimal pension solution for you in line with your personal needs. You should also take advantage of our pension advice service.


Property market
The property market refers to all properties for sale and available to buy. Property prices are determined by the market principle of supply and demand.


Property gains tax
When disposing of landed property, natural persons and legal entities pay a property gains tax on any clear profit made. The longer someone has owned the landed property, the lower the tax burden. The highest amounts are paid by those who buy landed property and sell it on again shortly afterwards (for a profit).


Property transfer tax
When a property is transferred, a property transfer tax is also payable, depending on the canton, in addition to any property gains tax. While property gains tax is only payable if a profit is made, property transfer tax may be payable on all transfers. Depending on the rules at canton level, the tax obligation even arises when joint ownership arrangements are converted to co-ownership or similar set-ups. Property transfer tax is based on the sale price in each case and generally represents a percentage of this.


Pension fund (2nd pillar)
The pension fund covers occupational pension provision in Switzerland and forms part of the three-pillar system.


Pension fund assets
The total amount of all contributions paid in to the pension fund during a career is referred to as pension fund assets. These assets can either be withdrawn upon retirement or paid out as a pension.


R

Refinancing
Refinancing refers to the process whereby financial institutions procure capital to finance ongoing business (credit facilities and mortgages) – be it from the National Bank or other financial institutions. The term ‘refinancing’ is also sometimes used, rather informally, to refer to the extension or replacement of a mortgage.


Right of residence
The right of residence is a right recorded in the land register which gives the entitled person permission to reside in certain rooms within a property or even the property in its entirety. This is the case, for example, when parents leave their children a property but retain the right to live in the property themselves as well.


Right of pre-emption
Right of pre-emption in relation to a property means that a person has the right, when the property is offered for sale, to buy this first, i.e. before other interested parties.


Replacing a mortgage
If a mortgage agreement expires, it is necessary to replace or extend the mortgage. It is important to make arrangements for replacing the mortgage around 18 to 24 months before the current mortgage agreement expires. Choosing the right strategy will depend on the general predictions regarding interest rate trends and the person’s individual needs.


Registered mortgage certificate
Unlike the bearer mortgage certificate, the name of the lender appears on this kind of mortgage certificate. In the event of a change of owner, an endorsement is required besides the physical handover. The registered mortgage certificate is not used very often these days.


Renovation fund (condominium)
Regular reserves set aside in so-called renovation funds for condominium owners are used to provide finance for extensive renovation work, which tends to be needed after 20 to 30 years of use. Otherwise, this needs to be financed via a direct cost-sharing arrangement.


Rental value of owner-occupied property
Inhabitants of a property must pay tax in Switzerland on the so-called rental value of owner-occupied property (as if it were income). This rental value is based on the amount the owner would achieve by renting to a third party or the amount the tenant would have to pay by way of rent. In return, debt interest and maintenance costs may be deducted from income.


Right to build
A right to build applies when a landowner grants a person a time-restricted right to build on or under their land. The landowner refrains from using the land for their own purposes during this time and generally collects interest on the right to build.


Retirement planning
Retirement planning is understood to mean addressing the issue of retirement in good time. It is about calculating what kind of pension can be achieved with the pension assets saved up to retirement and whether any gaps need to be plugged before this comes around.


Renovation
Renovation refers to conversion work on a property. From a tax perspective, a distinction is made between renovation work intended to preserve a property's value and work intended to add value. While investments aimed at preserving value (such as painting a wall or replacing a kitchen appliance which has had its day) are tax-deductible, investments aimed at adding value (such as building an additional room) are not.


Rollover mortgage
Some mortgage lenders use the term rollover mortgage to refer to the Libor mortgage (see the entry for Libor mortgage).


S

Suretyship
The suretyship is a kind of unilaterally binding contract whereby the surety (i.e. the person concerned) assumes an obligation vis-à-vis the creditor of a third party (the so-called principal debtor) to answer for the third party's liabilities. The creditor intends, with the suretyship, to cover themselves in the event of their debtor becoming unable to pay. In most cases, the third party will be a borrower and the creditor will be a financial institution providing the loan.


Second mortgage
For the purposes of financing a property, lending of up to and including 65% is referred to as the first mortgage. If lending exceeds this 65%, a second mortgage is required, which will need to be amortised within 15 years or by retirement age at the latest.


Swap rate
Swap refers to the rate at which banks lend money to each other and secure their credit commitments. The margin associated with the costs of securing credit commitments is based on the difference between the swap and the actual interest rate.


Sole ownership
One possible form of ownership when buying a house is sole ownership: one single owner is recorded in the land register, is free to dispose of the immovable property, and is responsible for it in return. In the case of married couples or registered partnerships, the law protects the partner too in the event of a separation and may, for example, grant them temporary right of residence.


Saron
Saron (Swiss Average Rate Overnight) will replace Libor as the reference interest rate. Unlike Libor, the price of Saron is determined via a platform at the Swiss stock exchange. It is also based on actual transactions and not on agreements between banks.


T

Third pillar
While every Swiss person is obliged to pay in to the 1st pillar and those in employment automatically pay in to the 2nd pillar, private pension provision is voluntary and comes under the 3rd pillar. It serves as a top-up to help people maintain their standard of living in old age and plug any gaps in their pension provision. A distinction is made between restricted pension provision under pillar 3a and unrestricted pension provision under pillar 3b. Pillar 3a is supported by federal funds and can be recognised for tax. It is earmarked for a specific purpose, although early access may be possible in exceptional circumstances such as buying a house. Unlike pillar 3a, the unrestricted pension provision under pillar 3b does not offer any tax advantages and is intended to provide flexibility for those looking to set something aside for their old age.


U

V

Variable-rate mortgage
The variable-rate mortgage is a flexible mortgage product for which no pre-defined term is normally agreed. In addition, a variable-rate mortgage may be cancelled at any time subject to a relatively short notice period of 3 to 6 months without additional costs.


Value-adding investments
Value-adding investments refer to investments in a property which go beyond mere value preservation, such as creating a spa area. Unlike value-preserving investments, value-adding investments are not tax-deductible.


Value-preserving investments
Value-preserving investments refer to investments which preserve, rather than increase, the value of a property. Examples include painting walls or replacing a faulty dishwasher.


W

Z

Current mortgage rates

Libor mortgage from 0.56%
Fixed-rate 10 years from 0.82%
Fixed-rate 5 years from 0.59%

The displayed interest rates are the best rates currently available. Your personal interest rates may vary depending on LTV, affordability, mortgage amount and the location of the property.