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.

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.

You apply for a mortgage by clarifying budget, own funds and affordability, assembling the necessary documents on income, assets and the property, and obtaining offers based on the property valuation. After that you choose the interest model and tranches, negotiate terms and sign the contract; the mortgage deed and land register entry secure the loan, and the disbursement takes place at the transfer of ownership. A broker or independent mortgage specialist can compare offers, negotiate conditions and speed up the process, often achieving better terms and a more suitable interest strategy.

Belehnung is the ratio of the mortgage to the relevant valuation basis of the property, the lending value (Belehnungswert). The lending value is a conservatively determined, bank‑internal value and can be below the purchase price; banks typically finance only a percentage of this value. In Switzerland up to about 80 percent is common, of which roughly two thirds are in the first rank and the remainder in a second rank subject to amortization. A lower lending ratio generally reduces the interest margin, improves affordability and makes the financing more robust.

Affordability (Tragbarkeit) describes whether a household can sustainably cover the ongoing costs of a mortgage. Banks use conservative calculations with an elevated assumed interest rate, an annual amortization and flat maintenance costs. As a guideline, these housing costs should not exceed about one third of gross income. Obligations like leasing or loans are deducted and variable income is only partially counted so the financing remains stable even if interest rates rise.

You calculate a mortgage by first determining the lending value of the property and the equity and deriving the maximum financeable share from that, typically up to about 80 percent. The mortgage is often divided into a first tier up to roughly two‑thirds and an amortization‑required second tier above that. For affordability you add imputed interest, amortization of the second tier, and maintenance and ancillary costs and check whether total costs do not exceed about one third of gross income. The actual interest costs depend on choosing a fixed‑rate mortgage or a SARON product; for fully amortizing loans the constant annuity can be calculated with the standard formula above.

The first mortgage is in the first rank, is better secured for the bank and therefore usually cheaper. It typically covers the financing share up to about two thirds of the lending value and is often not mandatory to amortize. The second mortgage finances the upper share up to the maximum LTV—typically around 80 percent—costs more and generally must be repaid within about 15 years or by retirement. More equity reduces or replaces the need for a second mortgage and improves affordability and terms.

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.