An interest rate swap (from English 'to swap' for exchange) is an agreement between two parties to exchange interest payments. In Switzerland, banks primarily use CHF swaps to hedge against fluctuating interest rates. If you take out a fixed-rate mortgage, the current swap rate is the bank’s “purchase price” for the money it lends you.

A mortgage is a loan secured by a property, guaranteed in the land register by a real-estate lien (mortgage certificate). It finances the purchase or construction of residential property, while equity covers the remainder. Terms such as interest rate (fixed or money-market-linked), term and amortization determine costs and flexibility. Banks therefore check loan-to-value and affordability to ensure the burden remains sustainable in the long term.

Amortization is the scheduled repayment of the mortgage, which reduces the outstanding debt and thus the loan-to-value. In Switzerland the second rank is generally reduced within about 15 years or by retirement to around two-thirds LTV; the first rank is often not mandatory. Repayment is either direct (payments on the mortgage) or indirect (contributions to Pillar 3a pledged to the bank). Pace and method depend on liquidity, risk appetite and interest-rate commitment; special repayments must comply with the contract terms.

A mortgage is a specific loan that is always secured by real estate and is registered in the land register. It is generally used to finance the purchase, construction, or renovation of owner-occupied property and, because of the security, offers lower interest rates and longer terms. "Loan" is the umbrella term for any kind of lending, including unsecured personal or business loans. The main difference is the collateral and the resulting differences in terms, durations and processes.