While using a mortgage to finance a house, the bank accept to finance a part of the total real estate cost. The<\/p>\n
mortgage debt is simply the sum “given” by the bank.<\/p>\n
This is the repayment of the mortgage debt.<\/p>\n
In Switzerland, not necessarily, but highly recommended, as you will continue to pay interest for your mortgage debt.<\/p>\n
Interest is calculated annually deptending of the interest rate of your mortgage and the amount of your debt.<\/p>\n
Thus, the monthy cost is COST = RATE X DEBT \/ 12<\/i>. For example, a 400,000 Chf mortgage with a 2% interest<\/p>\n
rate will represent a monthly charge of 400,000 X (2\/100) \/ 12 = 667 Chf monthly.<\/p>\n
Yes. Also, a fixed-rate contract will guarantee you a fixed rate over the term of the contract.<\/p>\n
Yes. Also, that means you’ll stop the mortgage with your current bank to choose another one.<\/p>\n
Direct amortization consists of reimbursing your banl at regular intervals. This will reduce directly your<\/p>\n
mortgage debt.<\/p>\n
Indirect amortization consists of establishing a life insurance as a 3rd pillar. Rather than paying off Your<\/p>\n
mortgage, you put the money on this life insurance, which can serve you at retirement to repay all or part of your<\/p>\n
mortgage at once.<\/p>\n
Generally, owners prefer the indirect one. Indeed, even if the indirect amortization does not directly lower<\/p>\n
your mortgage debt, and therefore the interest you have to pay, this solution offers interesting tax<\/p>\n
deductions.<\/p>\n
Yes. This is, indeed, why indirect amortization is interesting.<\/p>\n