Mortgage calculator: the key to your home.

When calculating your mortgage, both the interest rate and period over which you amortise the mortgage to two thirds of the value of the property are decisive factors. The shorter the amortisation period, the higher the costs per month and vice versa. The MoneyPark mortgage calculator is based on the standard Swiss amortisation period of 15 years. At least two thirds of the mortgage must be paid off by the time the borrower reaches retirement age at the latest.

Affordability means the ratio of the property’s ongoing costs to the mortgage borrower’s income. The costs of financing include interest payments and the agreed amortisation amount for the mortgage, as well as maintenance and incidental costs for the property. As a rule of thumb, the ongoing costs for the property should not exceed one third of the mortgage borrower’s gross income.

In addition to affordability, the loan-to-value ratio is also one of the key criteria for securing a mortgage. The loan-to-value ratio indicates the ratio between the amount of the mortgage (borrowed capital) and the value of the property. Normally, the loan-to-value ratio must not exceed 80 per cent. This means at least 20 per cent of the value of the property must be financed by the deposit.

In the context of a mortgage, a deposit is the amount of money that you contribute yourself to finance part of the purchase price or costs of construction. Deposits are usually made up of savings, assets, retirement savings (pillar 3a and 3b), gifts or early inheritance and are needed to cover the shortfall in the available financing. When buying a residential property to be occupied by the owner, the deposit must cover at least 20 per cent of the property’s value.

The ideal amount to borrow with a mortgage depends on your individual financial circumstances and your strategy. You should choose an amount that means you can comfortably afford the monthly interest and repayments without negatively affecting your standard of living. In general, mortgages amount to 70-80% of the value of the property in order to guarantee a balanced ratio between the deposit and borrowing.

There is only a small number of cases where dividing a mortgage into several tranches makes sense. An example of such a case is if you want to pay back an amount after a certain period of time because you are expecting to receive an (early) inheritance. You will then be able to pay the first tranche after five years for example, with the second tranche taking another five years. However, if it is possible to plan this, an amortisation schedule of this kind can also be set in advance in the credit agreement. It might also make sense to combine a fixed-rate mortgage and a SARON mortgage to mitigate interest risks. In general however, staggering a fixed-rate mortgage into tranches should be advised against, because doing so will make you dependent on the financing institution and deprive you of the option of switching lenders when a tranche comes up to term.