First mortgage

What is a 1st mortgage?

When you are taking out a mortgage to finance your real estate purchase in Switzerland, your mortgage may amount to no more than 80% of the collateral value of the property.

The mortgage is divided into two parts: the 1st mortgage and the second mortgage. The 1st mortgage amounts to no more than two thirds, that is, 66 % of the value of the property.

Amortisation of the 1st mortgage

For the lending institution, the 1st mortgage is the risk-free part of your loan, and thus you do not need to redeem it. The mortgage interest payments thus typically remain constant over the entire lifetime of the mortgage. However, you may still choose to redeem your first mortgage.

In reality, redeeming your first mortgage is not common practice in Switzerland, and most homeowners in fact choose not to redeem their first mortgage at all. If you would like to know more about mortgages, or if you would like help with your financing, our financial partner Strike is at your disposal.

Example

For your real estate purchase of CHF 1’000’000, your bank has granted you a loan of 80 %. The mortgage then amounts to CHF 800’000 overall, with a first mortgage of CHF 660’000 and a second mortgage of CHF 140’000.