Difference between first and second MortgageThe difference between the first and second mortgage
Everything about first and second mortgage
Profit from an individual, personal consultation in one of our stores or from the comfort of your own home via our on-line consultation. For this reason, a so-called second mortgage within the framework of mortgage loans is not necessarily a must, because anyone who can provide the necessary capital only needs a mortgage.
A first mortgage is capped at 65 to 70 percent of the value of the real estate. But if your first mortgage still left an equity shortfall, this can be closed by a second mortgage. A further limitation exists for this first and second mortgage combination:
Up to 80 percent of the acquisition or building expenses can be funded by a mortgage credit. If you take out a mortgage credit, you must fulfil certain conditions. According to the legal regulations, all mortgage creditors must make an own capital participation, and the financing of at least 20 percent of the building or acquisition expenses is obligatory - i. e. 150,000 to 200,000 Swiss Francs, according to the dimensions and site of the real estate and its equipment.
It is only the amount exceeding 20 per cent of the equity that can be funded by debt, and a mortgage agreement can be concluded for this reason according to one of these three procedures: A first mortgage finances up to a certain percent of the fair value of your real estate, so your mortgage credit threshold is between 65 and 70 percent, according to the mortgage lender.
The second mortgage covers the shortfall of 10 to 15 per cent of the entire amount of credit you need. You have basically the same option as the first mortgage, although as it is called a subordinated mortgage, your second mortgage attracts a slightly higher interest for you. The interest on your second mortgage would on averages be 0.5-1% higher than for your first mortgage.
Besides the slightly higher interest rates, the key difference between the first and second mortgage is how the amortisation rule applies. Whereas the first mortgage has no duration in general and therefore does not have to be paid back after a certain number of years, this is not the case with the second mortgage.
There is an amortisation requirement here, i.e. this mortgage must be amortised within a certain timeframe or before reaching a certain pensionable age. However, this is not the case for the mortgage. Although the information may slightly differ depending on the lender, the second mortgage usually has to be repaid within 15 years or before pensionable life, whichever comes first.
In our branch offices, we can advise you comprehensively on all mortgage questions and guide you through the whole mortgage lending procedure. Which kind of mortgage should you consider? Do you really need a second mortgage? With our help, we can organise the best conditions for your first and second mortgage so that you can realize your dreams of homeownership with peace of mind.
Individual interest rate levels may differ based on LTV, affordable price, mortgage amount and home located.