Mortgages in Switzerland: how the system works

Home loans are cheap in Switzerland. There are good sides and bad sides to this. Here is what you need to know about mortgages in Switzerland, a country renowned for its banks. Mortgages, it is often said, are a burden that a person has to carry for many years – perhaps even for life. In reality, though, property loans in most countries are designed so that the debt is paid off at some point. Thus, in Germany, France and the United States, so-called repayment mortgages are common. Here the borrower repays the capital and the interest in fixed instalments over a fixed period. The counter-model is a loan where only the interest is paid on the amount borrowed. Once the mortgage term ends, the full capital is due – and the borrower usually takes out a new mortgage. This interest-only model was particularly popular in the UK, until it was superseded by the repayment model. Switzerland, meanwhile, follows its own path. The principle of deferred debt is still common here. And because the ...