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UBS Mortgages
Glossary
1st mortgage
The loan-to-value ratio lies within the range of the first mortgage if 65% or less of the purchase price has been financed by the bank and 35% or more has been financed by the owner.
Examplel:
With a purchase price of CHF 1'000'000, the first mortgage can be up to CHF 650'000.
Top2nd mortgage
The loan-to-value ratio lies within the range of the second mortgage if between 65% and 80% of the purchase price has been financed by the bank and 20% or more has been financed by the owner. Given the higher loan-to-value ratio and the associated higher risk of loss, the mortgage interest rate is higher than for first mortgages.
Examplel:
With a purchase price of CHF 1'000'000, the first mortgage is CHF 650'000 and the second mortgage can be up to CHF 150'000.
2nd pillar
= Pension fund You can use your pension fund assets to finance owner-occupied property. To ascertain the available amount, check your benefit statement or ask your pension fund.
3rd pillar
= private pension provision with banks or insurers You can use the savings from your private pension cover (e.g. UBS Fiscainvest) to finance owner-occupied property. Funds may be withdrawn every 5 years.
Amortization
Repayment of a loan in instalments, as a general rule 1% of the mortgage (see also direct amortization and indirect amortization).
Examplel:
With a mortgage of CHF 400'000, the amortization is CHF 4000 per year.
Building volume
You can find the building volume (=cubage or converted space) in the extract from the cantonal building insurance, in plans, sales documentation or in the extract from the Land Register.
Cadastral survey map
Contains streets, plot boundaries, buildings. Updated by the Land Registry each time there is a change in the property.
Capital market
The capital market is a market for medium and long-term investments of 1 year and above.
Compensation
When a client buys into or buys out of a UBS portfolio mortgage, compensation is credited or debited to the client. These payments offset the difference between the basic interest rate of the portfolio and the current market rate.
Examplel:
If the basic interest rate of the portfolio is lower than the current market rate, the client has to pay a buy-in fee to buy into the cheaper portfolio; conversely, if the client decided to buy out, he/she would receive a buy-out payment.
Condominium management regulations
Provisions governing the collective management and use of the whole property as well as a list of the rights and obligations of the unit owners.
Construction zone
According to planning and construction law, communities divide their land into zones, which define how the properties within them are to be used.
Examplel:
Core zone, residential zone, industrial and commercial zone, zone for public amenities, non-designated zone, other community area.
Direct amortization
The size of your mortgage decreases with each payment. Even taking into account the somewhat lower interest payments, you generally fare better with indirect amortization thanks to the tax advantages (see indirect amortization).
Economic viability
The burden on a person's income that the cost of the property will incur, in per cent.
Examplel:
With a gross income of CHF 80'000 and total costs of CHF 22'000 (=mortgage interest CHF 15'000 + amortization CHF 3000 + ancillary costs CHF 4000), the economic viability amounts to 27.5%.
Extract from the Land Register
Contains detailed information on a property, e.g. owners, purchase date, plot number, easements.
Family home
Property that the family occupies and that is therefore protected by law. For this reason, the consent of both spouses is required before the property can be bought, financed or sold.
Fit-out standard
What is the quality of the materials and fittings used? Are there special structural or material features in the living areas, kitchen, bathrooms, flooring and wall coverings?
Examplel:
Fireplace, wood burner, electric shutters, number of bathrooms, material used (e.g. marble), number of built-in wardrobes, fitted appliances (e.g. dishwasher, washing machine, tumbler).
Gross floor area
Net living area plus size of all wall cross-sections (ground plan of interior and exterior walls), not to be confused with the floor space.
Imputed interest rate
= average expected rate of interest over the next few years
Buying your own home is equivalent to investing in the future. UBS uses an imputed interest rate, as the loan must be economically viable for you even when interest rates are high. The actual interest costs may differ from the imputed interest rate.
Examplel:
The interest rate for the mortgage you would like is 4.75%, but the amount payable is calculated using the imputed interest rate of 5%.
Indirect amortization
Only possible with owner-occupied property. Instead of paying off your mortgage directly, you invest in your Fiscainvest account (third pillar). This means your retirement savings go up while the mortgage amount (principal) remains the same, allowing you to save for your retirement. You also save on tax, because you can deduct this repayment and the full mortgage interest from your taxable income (incl. imputed rental value). You can withdraw the money in your UBS Fiscainvest account at any time in order to repay your mortgage (see also amortization and direct amortization).
Interest on/amortization of other liabilities
Please enter your interest and amortization costs here if you have taken out a credit line or loan or have assumed a surety.
Examplel:
You have an unsecured consumer credit with Prokredit in St. Gall amounting to CHF 12'000 and have to repay CHF 2500 per year.
Land Register
The most important information about a property is contained in the land register.
Examplel:
The land register is normally kept by the local authority where the property is located.
Ownership
Location
Boundaries
Land Charges (Mortgages)
Easements
BVG Selling Restrictions
LIBOR
LIBOR (London Interbank Offered Rate) is the rate at which banks place money on deposit short-term with other prime banks. It serves as a general reference rate.
Life tenancy in favour of
A person listed in the Land Register has the right to live in the property for the specified duration.
Examplel:
Right of the wife of the deceased homeowner to live in the property for the duration of her lifetime.
Loan-to-value ratio
Ratio of the mortgage to the market value or purchase price of a property in per cent.
Examplel:
With a purchase price of CHF 1'000'000 and a mortgage of CHF 700'000, the loan-to-value ratio is 70%.
Location quality
How would you rate the location of your property within your community or district in terms of: desirability (popularity, prestige value of the residential location, social stratum, attractiveness of the neighbouring residential area), view, sunshine (e.g. north-/south-facing), noise level. The easiest way of doing this is by means of the exclusion principle: Is the actual location one of the best/most attractive areas or one of the less attractive areas?
Maintenance
Cost of work to keep a property in good repair.
Examplel:
Renovations, repairs, garden maintenance.
Market value
Estimated value calculated by professional property appraisers which reflects the market value.
Examplel:
Price at which you could probably sell your home today.
Money market
The money market is a market for short-term funds with a maturity of less than 12 months.
Mortgage
In simplified terms, a mortgage is the usual form of financing a property, with the property serving as collateral for the bank.
Examplel:
With a purchase price of CHF 1'000'000 and own funds of CHF 200'000, the bank finances CHF 800'000. This means you have taken out a mortgage of CHF 800'000.
Net living area
Floor space of the rooms which are occupied all year round (incl. kitchen, bathroom, toilet, halls and stairwells within the home, individual rooms/attic rooms in the same building; excl. balconies, terraces, loggias, washrooms, saunas, attics/cellars, storerooms, shelters and garbage rooms).
Net rental income
Rental income from a property which you own minus the cost of this property (mortgage interest, ancillary costs, maintenance costs).
option «Advantage»
We recommend the «Advantage» option if you do not have much time to look after your mortgage.
option «Basic»
We recommend the «Basic» option if you want your interest payments to remain constant.
Own funds
Money which the purchaser puts up him-/herself to finance a property. The funds are paid in cash and should amount to around 20% of the purchase price. These funds typically come from savings, inheritance or third-pillar retirement provision.
Examplel:
With a purchase price of CHF 1'000'000 and own funds of CHF 200'000, the bank finances CHF 800'000.
Own work
Building and renovation work which the purchaser of the house or his/her family and friends carry out themselves.
Preliminary Contract
The buyer and seller use the Preliminary Contract to state their intentions to enter into a main contract. It can be signed prior to the availability of all the information required for a Purchase Contract. The Preliminary Contract must be notarized as a public document.
Purchase Contract
The Purchase Contract sets out both the buyer’s and the seller’s obligations arising out of the sale and purchase of a property. It is required to be a notarized public document.
Purchase price
The purchase price does not include any transaction costs such as taxes or fees payable to central/local government.
Real Estate Transfer Tax
Most Cantons levy a Real Estate Transfer Tax. The tax is calculated on the purchase price or on an official estimated value in the case of gifts and inheritances. Normally this tax is paid half by the buyer and half by the seller.
Real Property Gains Tax
Real Property Gains Tax is levied by the Cantons. It is calculated on a property’s increase in value as shown by the difference between its purchase price and subsequent selling price. It is paid by the seller. It is, therefore, very important that you keep all purchase and construction invoices. The Federal Government only taxes profits on the disposal of real property if it is business income.
Restricted life insurance
A restricted life insurance policy serves as pension cover and therefore entitles you to tax advantages (contributions can be deducted from your taxable income). However, there are restrictions on what the money paid in can be used for (e.g. withdrawal is not possible until you reach retirement age).
SIA
Schweizerischer Ingenieur- und Architektenverein (Swiss Association of Engineers and Architects). The SIA publishes industry standards, recommendations, guidelines, etc.
Site plan
Shows the location of real estate and the buildings in the corresponding community, street, etc.
Size of real estate
Proportion of the real estate (=plot) which is to be used for construction according to the zoning regulations, including the space that the building will take up. Usually, the size of the real estate is the same as the proportion of the land used for construction. Certain areas have no construction status, e.g. parks, protected areas, forest/agricultural zones.
State of the property
Properties less than 4 years old are classed as new. Older properties are assessed on the basis of the state of the interior (kitchen, bathroom, walls, floors, fittings and fixtures) and exterior/shell (such as the facade, roof, windows).
Surety
Contractual obligation of the guarantor to be liable for the payment of the debt of a third party.
Examplel:
You stand surety for the leasing of a car by your son.
Third-party loan
Money provided by third parties.
Examplel:
Your parents put up money in order for you to purchase a house; you then have to pay back this money (with or without interest).
Unrestricted life insurance
With an unrestricted life insurance policy, you are free to use the money paid in however you wish. However, the contributions are not tax-deductible.
Usufruct in favour of
A person listed in the Land Register has the right to income from the leased property for the specified duration. However, they often have to pay the maintenance costs as well.
Examplel:
The parents have already transferred the property to their children but still have usufructuary rights.
Value-reducing easements
A charge on a property noted in the Land Register which reduces the value thereof. Public rights of way/access or other rights of way (e.g. for water, gas or electricity cables) do not fall into this category.
Examplel:
Provisions governing the erection of buildings near boundaries or in close proximity, preservation orders, usufructuary rights, life tenancies and construction bans.
Important legal information - please read the disclaimer before proceeding.
Products and services in these webpages are not available for US persons, for the exclusion of residents of other nations see the disclaimers relating to the actual services.
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