First and Second Mortgages
Explained Simply
The terms and are among the fundamentals of in Switzerland. Even though many today only report a single aggregate Mortgage, internally they almost always still calculate using this breakdown.
The following text discusses the “rules” for owner-occupied properties.
Die erste Hypothek deckt in der Regel den tieferen, sichereren Teil der Belehnung ab. Da sie im Verwertungsfall zuerst bedient wird, ist das Risiko für den Kreditgeber geringer und der Zinssatz oft attraktiver. Bei vielen Kreditgebern gilt eine Hypothek bis maximal rund 65% als erste Hypothek. Mehr dazu hier: Erste und zweite Hypothek
Die zweite Hypothek finanziert den höheren Teil der Belehnung (meist aber rund 65% des Belehnungswertes) und ist für den Kreditgeber riskanter. Deshalb kann der Zinssatz höher sein und es gelten häufig strengere Amortisationsvorgaben. Wer die maximale Hypothekarhöhe ausschöpfen will, braucht immer eine zweite Hypothek.
Immobilienfinanzierung
Unter Immobilienfinanzierung versteht man die Finanzierung einer Immobilie mit Eigenkapital und Fremdkapital. In der Schweiz erfolgt die Finanzierung meist über eine Hypothek, welche durch Eigenmittel ergänzt wird. Um die optimale Hypothek mit den besten Zinsen zu finden, sollten Immobilienbesitzer aktuellen Hypothekarzinsen vergleichen und mehrere Offerten einholen.
Hypothekenanbieter sind Banken, Versicherungen,Pensionskassen oder andere Finanzierungspartner, die Hypotheken vergeben. Da Zinsen, Vergabekriterien und Prozesse stark variieren, lohnt sich ein breiter Vergleich mehrerer Anbieter. Ein umfassender Hypotheken Zinsvergleich ist digital in wenigen Minuten möglich unter app.hypotheke.ch
Explanation
What are first and second mortgages?
The distinction is based on the
- 1. Mortgage: up to approx. 65% of the property value
- 2. Mortgage: from 65% to a maximum of 80%
The higher the Loan-to-value ratio, the higher the risk for the mortgage lender. Mortgage lenders calculate the value of the property in different ways. Some are more stringent or use different tools to appraise the property. The amounts of the first and second mortgages therefore vary from provider to provider.
Mehr dazu auch hier: Maximal mögliche Hypothek
Die Belehnung zeigt, welcher Anteil des Immobilienwerts durch Hypotheken finanziert werden kann. Beispiel: Bei CHF 700’000 Hypothek und CHF 1'000’000 Verkehrswert beträgt die Belehnung 70 Prozent. Sie beeinflusst das persönliche Rating der Immobilienfinanzierung und somit den Zinssatz sowie z.B. die Tragbarkeit und Amortisation. Mehr dazu hier: Maximale Hypothek,erste und zweite Hypothek erklärt
Long-term and stable
The 1st Mortgage
A first Mortgage is considered very secure because it is backed by a large portion of the property’s value.
Features
- Loan-to-value ratio of up to approx. 65% of the property value
- No
- often structured for the long term (possible even beyond retirement)
- usually a lower interest rate
For mortgage lenders, this segment is particularly low-risk. There are mortgage lenders, such as that only grant mortgages with a Loan-to-value ratio of up to 65% or 70%. For this reason, those with only a first Mortgage can often benefit from particularly favorable terms.
Mandatory amortization refers to the contractually required repayment of a portion of the Mortgage. In Switzerland, the so-called second Mortgage on owner-occupied residential property must generally be reduced to approximately two-thirds of the property’s value within 15 years or by the time of retirement. Mandatory amortization can be achieved either directly by repaying the Mortgage or indirectly through Pillar 3a. It serves to reduce the long-term risk for mortgage lenders and property owners.
Higher Risk, Clear Rules
The Second Mortgage
The second mortgage covers the portion of the Loan-to-value ratio above 65%.
Features
- Loan-to-value ratio ranging from 65% to, in most cases, a maximum of 80% of the property value
- must be amortized (usually within 15 years or until retirement). Amortization can be done directly or indirectly.
- Higher risk for the bank
- often a higher interest rate
The reason for the increased risk: In the event of a foreclosure, the first Mortgage is repaid first. The second Mortgage is only repaid if the proceeds from the sale of the property are sufficient to cover it (first- and second-priority Borrower's notes).
Visualization
Maximum proportions of first and second Mortgages
Minimum
How much down payment do I need?
When purchasing a property, the general rule is: at least 20% of which at least 10% —that is, excluding pension fund assets.
Equity includes
- Savings and account balances
- Securities
- Pillar 3a
- Gifts or advance inheritance
- Pension fund (restricted)
- Personal contributions or Lot
Funds from the 2nd pillar may be used in full as own funds until age 50. Starting at age 50, withdrawals are limited: You may withdraw either the amount you had at age 50 or half of your current pension fund assets, whichever is greater.
The higher amount applies. You can find out how much money you have saved in your pension fund directly from your pension fund or on your current pension fund statement. Many pension funds indicate on the pension fund statement the maximum possible amount available for home ownership (WEF withdrawal). For more information, see here: Homeownership Support (bsv.admin.ch)
Equity refers to the financial resources that a homebuyer contributes personally toward financing a property. In Switzerland, when purchasing a primary residence, at least 20% of the property’s value must generally be financed with the buyer’s own funds. At least 10% of this must come from so-called “hard equity,” such as savings, securities, gifts, or advance inheritance payments. The higher the equity, the lower the Mortgage amount, which improves Affordability and often leads to better Mortgage rates. However, the optimal amount of equity also depends on taxes, Precaution, liquidity, and personal investment strategy.
Hartes Eigenkapital umfasst jene Eigenmittel, die nicht aus der beruflichen Vorsorge (Pensionskasse) stammen. Dazu gehören beispielsweise Bankguthaben, Wertschriften, Schenkungen, Erbvorbezüge oder der Erlös aus dem Verkauf einer anderen Immobilie. Beim Kauf von selbstbewohntem Wohneigentum verlangen die meisten Kreditgeber, dass mindestens 10 % des Immobilienwertes mit hartem Eigenkapital finanziert werden. Gelder aus der Pensionskasse dürfen diesen Anteil in der Regel nicht ersetzen. Hartes Eigenkapital gilt für Banken als besonders wertvoll, weil es die finanzielle Stabilität des Käufers erhöht und das Risiko der Finanzierung reduziert. Dadurch verbessert sich oft auch das persönliche Hypotheken-Rating und die Verhandlungsposition bei den Hypothekarzinsen.
Source
Why are there first and second mortgages in the first place?
This classification is primarily used for risk assessment: A low Loan-to-value ratio means low risk and results in better terms. A high Loan-to-value ratio entails higher risk, stricter rules, and less favorable Mortgage terms.
A first-lien mortgage is always repaid before a second-lien mortgage if the property is sold (foreclosed). The priority of the mortgages is bindingly recorded in the Land registry. A second-lien mortgage therefore carries significantly greater risks for the mortgage lender than a first-lien mortgage.
If the entire mortgage is held by the same mortgage lender, a consolidated statement is usually prepared to assess risks and margins. In practice, however, mortgages can also be split among multiple mortgage lenders. In this case, the mortgage’s priority ranking is crucial.
Frequently Asked Questions
Answers about first and second mortgages
Within 15 years or until retirement (whichever comes first). This applies to owner-occupied residential property. Different guidelines apply to investment properties.
Weil sie für die Bank ein höheres Risiko darstellt. Sie steht im zweiten Rang und wird im Risikofall erst zurückbezahlt, wenn die Schuld aus der ersten Hypothek vollständig getilgt ist. Deshalb ist der Zinssatz der zweiten Hypothek höher. Risiken aktiv zu steuern ist gerade bei der Ratingoptimierung bei der Hypothek ein wichtiges Thema.
No, usually not necessarily. Many people keep their first Mortgage for the long term, provided their affordability is met.
Direct
Debt is effectively reduced.
Indirectly
Contribution to Pillar 3a / retirement savings; the Mortgage amount remains the same. Only after a specified period does the Mortgage begin to be paid off using the accumulated retirement savings.
Mehr dazu hier: Direkt oder indirekt amortisieren, was ist besser?
A second mortgage can only be increased if the property value has risen and the borrower still meets the Affordability requirements.
A mortgage increase is always reviewed on a case-by-case basis by the mortgage lender. In practice, it is not uncommon for the mortgage lender to block an increase in the second mortgage, even if Affordability and the “new” Loan-to-value ratio would be within acceptable limits based on the numbers alone. Each case is evaluated individually.
An important point: Not every evaluates things the same way. Differences exist in Valuation—Purchase price versus appraised value—affordability calculations, maximum Loan-to-value ratios, and how income and assets are handled.
In practice, this can lead to significant differences: For the same property, one provider may offer a maximum Mortgage of 700,000 francs, while another may finance up to 850,000 francs.
The difference often lies in the assessment and calculation methods. Some mortgage lenders are deliberately stricter, while others are willing to take on “less favorable” deals.
Ein Kreditgeber stellt dem Kreditnehmer Kapital zur Verfügung und erhält dafür Zinsen. Bei Hypotheken sind Kreditgeber in der Schweiz meist Banken, Versicherungen oder Pensionskassen, die die Finanzierung vertraglich und durch ein Grundpfand absichern.
Conclusion
Understanding Leads to Better Decisions
Even though these terms are less commonly used today, first and second mortgages remain central to:
- Loan-to-value ratio
- Risk
- Amortization
- Financing Options
- Mortgage Interest Rate
If you understand the differences, you can optimize your financing strategy and compare better offers. Ask your mortgage lender what the Loan-to-value ratio is and at what value you can expect better interest rates. This is part of the for better interest rates.
Zinsverhandlung bei Hypotheken
Die meisten Hypothekarzinsen sind verhandelbar. Wie gross der Spielraum ist, hängt von Ihrer Bonität, der Belehnung, der Tragbarkeit und vor allem von den Alternativen ab, die Sie dem Kreditgeber gegenüberstellen können. Wer mehrere vergleichbare Offerten von Banken, Versicherungen oder Pensionskassen einholt, verbessert seine Verhandlungsposition deutlich. Wollen Sie die beste Hypothek ohne mühsames Verhandeln abschliessen? Nutzen Sie unsere Hypothekenplattform dazu. App.hypotheke.ch
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