Mortgage repayment

When you purchase a property, you must contribute at least 20% of the property's value from your own capital. The bank's financing will not exceed 80% and is split into two mortgages:

• First mortgage: max. 67% of the property value
• Second mortgage: max. 13% of the property value  

In contrast to the first mortgage, repayment is compulsory for a second mortgage. You must repay the mortgage within 15 years or before you reach retirement age, whichever comes first.

Benefits

• Mortgage debt decreases
• Mortgage interest charges reduce
  

Drawbacks

• Taxes increase because of decreasing mortgage interest payments
• Contributing to a private pension (pillar 3a) in addition to repaying the mortgage is only possible if there is enough financial flexibility
  

In the case of indirect repayment, the debt remains unchanged. As a home owner, you deposit the repayment amount into pillar 3a, which is in turn pledged to the bank as collateral. The capital is disbursed at the latest on retirement, and the mortgage is repaid in that amount.

Benefits

• Mortgage interest payments are tax-deductible.
• Your privately invested money (pillar 3a) can benefit when the stock market rises.
  

Drawbacks

• The mortgage debt is not reduced.
• Mortgage interest payments remain unchanged.
• Your privately invested money (pillar 3a) is at risk from fluctuations on the stock market.