The first mortgage is limited to two thirds of the real estate value. The second mortgage, therefore, serves to finance the rest of the credit that exceeds the first mortgage.
The bank finances a maximum of 80% of the value of the property, divided into two mortgages:
- First mortgage: max. 67% of the real estate value
- Second mortgage: max. 13% of the real estate value
Example: The purchase price is CHF 1,000,000 and the buyer has CHF 250,000 (25%) in equity. In this case, the mortgage loan would be 75%. This means that the first mortgage amounts to CHF 650,000 (65%) and the second mortgage CHF 100,000 (10%).
Second mortgage in detail
The main difference between the first and the second mortgage lies in the amortization obligation. The first mortgage has no maturity limit and doesn't have to be paid back after a specific number of years. The second mortgage, however, includes compulsory repayment.
The second mortgage must be amortized within 15 years or by the time you reach retirement age – whichever comes first.
You don’t have to get the second mortgage. If you have enough equity, you only need the first mortgage to finance your property.
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