What is the 2nd lien of a mortgage?

The 2nd lien is the portion of the mortgage between 67% and 80% of the property value (the lower of the purchase price and the bank's valuation). This tranche represents higher risk for the lender and is therefore subject to mandatory amortization.

How long do you have to repay the 2nd lien?

The 2nd lien must be fully repaid within 15 years or before retirement age (65), whichever comes first. For example, a person aged 55 will need to repay their 2nd lien within 10 years.

Can you amortize the 2nd lien faster than required?

Yes, early amortization of the 2nd lien is generally possible without penalty, as banks appreciate the risk reduction. However, check the terms of your mortgage contract, as some contracts have a rigid schedule.

What happens if the property loses value and the LTV exceeds 80%?

If the property value decreases and the LTV exceeds 80%, the bank may require additional amortization or supplementary equity to bring the ratio back to an acceptable level. This situation is rare but can occur during a real estate market downturn.

Second mortgage (2nd lien) amortization: rules, schedule, and calculation

The 2nd lien is the portion of your mortgage that must be mandatorily amortized. Understanding how it works, the repayment schedule, and the calculation of amounts is essential for every homeowner in Switzerland.

Definition of the 2nd lien

In Switzerland, the mortgage is traditionally divided into two tranches, called "liens" (or "ranks"), based on the level of risk for the lender:

1st lien: Up to 67% of the property's market value. This tranche is considered low-risk because, even in a forced sale, the bank typically recovers its capital. Amortization of the 1st lien is not mandatory.
2nd lien: From 67% to 80% of the property value. This tranche carries higher risk and is subject to mandatory regulatory amortization.

The "lowest value principle" applies: if the purchase price is CHF 1,000,000 but the bank's valuation is CHF 950,000, it is the latter value that serves as the reference for calculating the liens.

Mandatory amortization rules

The guidelines of the Swiss Bankers Association (SBA) and FINMA (Swiss Financial Market Supervisory Authority) impose the following rules for the 2nd lien:

Full repayment within 15 years maximum
Repayment no later than retirement age (65)
Whichever deadline is shorter applies
Payments must be linear and regular (no large lump sums at the end)

These rules apply to all mortgages granted since 2014, when the strengthened guidelines came into effect. For older mortgages, the conditions are defined by the existing contract.

Calculating the amortization amount

The calculation is straightforward: the 2nd lien amount is divided by the number of amortization years. Here is the formula:

Annual amortization = 2nd lien amount / Number of years

Example 1: Purchase at age 35

Item	Value
Property value	CHF 800,000
Total mortgage (80%)	CHF 640,000
1st lien (67%)	CHF 536,000
2nd lien (67%-80%)	CHF 104,000
Amortization period	15 years (retirement at 50 = 15-year rule is shorter)
Annual amortization	CHF 6,933
Quarterly amortization	CHF 1,733

Example 2: Purchase at age 52

Item	Value
Property value	CHF 1,200,000
Total mortgage (80%)	CHF 960,000
1st lien (67%)	CHF 804,000
2nd lien (67%-80%)	CHF 156,000
Amortization period	13 years (retirement at 65, shorter than 15 years)
Annual amortization	CHF 12,000
Quarterly amortization	CHF 3,000

In the second example, the annual amortization is significantly higher because the period is shorter (13 years instead of 15) and the 2nd lien amount is larger. This is an important point to consider when evaluating affordability.

Typical amortization schedule

Here is a typical schedule for Example 1 (2nd lien of CHF 104,000, amortization over 15 years, annual amortization of CHF 6,933):

Year	Amortization	Remaining 2nd lien	Total mortgage
0 (start)	--	CHF 104,000	CHF 640,000
3	CHF 20,800	CHF 83,200	CHF 619,200
5	CHF 34,667	CHF 69,333	CHF 605,333
10	CHF 69,333	CHF 34,667	CHF 570,667
15	CHF 104,000	CHF 0	CHF 536,000

At the end of 15 years, only the 1st lien of CHF 536,000 remains. This mortgage can be maintained with no further amortization obligation, which is the norm in Switzerland.

Direct or indirect amortization for the 2nd lien

Both methods are accepted by banks to fulfill the 2nd lien amortization obligation:

Direct amortization: The 2nd lien principal decreases with each payment. Simpler, but less tax-efficient.
Indirect amortization via pillar 3a: The 2nd lien remains constant, and capital accumulates in pillar 3a for repayment at maturity. Double tax advantage.

When the annual amortization exceeds the pillar 3a cap (CHF 7,258 in 2026 for an employee with a 2nd pillar), a combination of both methods is necessary. For example, in Example 2 above, with an annual amortization of CHF 12,000, the homeowner would contribute CHF 7,258 to pillar 3a and CHF 4,742 in direct amortization.

For a detailed comparison of both methods, see our guide on direct vs indirect amortization.

Impact of the 2nd lien on affordability

The 2nd lien amortization is included in the bank's affordability calculation (known as "Tragbarkeit" in German). The standard calculation uses a theoretical interest rate of 5% and includes:

Theoretical interest at 5% on the total mortgage
Maintenance costs: 1% of the property value per year
Annual amortization of the 2nd lien

The total of these charges must not exceed 33% of gross annual income. The 2nd lien amortization therefore increases the charges taken into account and can limit the mortgage amount granted.

Example: For a property worth CHF 800,000 with 80% LTV, the theoretical charges are: interest (5% x 640,000 = 32,000) + maintenance (1% x 800,000 = 8,000) + amortization (6,933) = CHF 46,933. The minimum required gross annual income is therefore CHF 46,933 / 0.33 = CHF 142,222.

Special cases

LTV below 67%

If your mortgage does not exceed 67% of the property value, there is no 2nd lien and therefore no amortization obligation. You may still choose to amortize voluntarily.

Mortgage renewal

When renewing your mortgage, if the 2nd lien has not been fully amortized, the original amortization schedule continues to apply. Switching banks does not reset the 15-year deadline.

Investment property

For investment (rental) properties, banks typically require a maximum LTV of 75% (not 80%). The 2nd lien (from 67% to 75%) is also subject to mandatory amortization, but conditions may vary by institution.

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