Swiss mortgage glossary
Key terms of the Swiss mortgage world, explained clearly in English. Click on a term to access its full definition.
SARON
Swiss Average Rate Overnight -- the Swiss money market reference rate.
Fixed rate
A mortgage interest rate guaranteed for a set period.
LTV / Loan-to-value
Ratio between the loan amount and the property value.
Pledging
Using assets (pillar 3a, securities) as collateral for the mortgage.
Amortisation
Gradual repayment of the mortgage principal.
Mortgage note (Cedule)
A property lien certificate serving as security for the mortgage.
Affordability
Ability to sustain mortgage costs according to bank criteria.
Equity / Down payment
Personal funds required for a property purchase.
Second rank
The mortgage portion between 67% and 80% of property value.
Debt-to-income ratio
Ratio of mortgage charges to gross income.
Market value
Estimated market value of a property.
Occupational pension (LPP/BVG)
2nd pillar -- can be used for primary residence purchase.
Pillar 3a
Tax-advantaged tied pension savings, usable for mortgage and tax-deductible.
Transfer duties
Cantonal tax levied upon property ownership transfer.
Land registry
Official register of property rights and charges.
Forward rate
Agreement to lock in a future mortgage rate in advance.
Construction loan
Bank loan for financing construction, disbursed in stages.
Imputed rental value
Fictitious taxable income corresponding to the use value of owner-occupied property.
Actual debt ratio
Real ratio of effective mortgage charges to household income.
Mortgage ranking
Classification of the mortgage as first or second rank based on LTV.
Building right (leasehold)
A real right to build on land owned by a third party.
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