All about mortgage financing

Complete exploration of mortgage financing

Mortgages, amortization, loan-to-value ratios, indebtedness and contingency plans are all essential elements to know when it comes to financing your property purchase.

The following information should help you to understand them more clearly

What types of mortgages are there?

Fixed-rate mortgage
With a fixed-rate mortgage, the mortgagee and mortgagee agree on an interest rate that remains the same throughout the term of the mortgage. While the mortgage holder does not benefit from a fall in interest rates, when rates rise, no additional costs are incurred. This guarantees a high level of financial planning security.

Variable-rate mortgage
In the current low-rate environment, the variable mortgage is the most expensive of the three mortgage types, and is normally only used for short-term intermediate financing. This is because variable mortgages have no fixed term, but are only subject to a notice period.

Mortgage Saron
Saron is set to replace Libor in Switzerland. Unlike Libor, the Saron interest rate is based on actual transactions and is therefore more transparent. In the past, Libor and Saron interest rates were generally very similar.

What is depreciation?

Amortization is the process of progressively repaying a loan or debt, where the total amount borrowed is repaid in several periodic payments, usually monthly.Amortization makes it possible to repay both the interest on the loan and the capital borrowed.

What is mortgage?

A mortgage is a type of loan used to finance the purchase of real estate, such as a house or apartment. When you get a mortgage, you borrow money from a financial institution (usually a bank) to buy the property. In return, you pledge the property as collateral. This means that if you don’t repay the loan according to the agreed terms, the bank has the right to seize the property to recover its debt by selling the property.

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