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If you already own your home and wish to obtain liquidity, you can perfectly use your property as collateral.

  • Indeed, it is not uncommon to mortgage your house to finance renovations, acquire a second home, or supplement your income during retirement.
  • To do so, your property is pledged through a mortgage note up to 80% of its market value.
  • Moreover, many homeowners mortgage their primary residence beyond the initial purchase in order to benefit from tax advantages.


What does it mean to mortgage your house?

Contrary to a common belief, mortgaging your home is not a sign of financial difficulty, but rather a capital management strategy. It consists of providing a guarantee to a bank (your property) in exchange for a loan.


The link between you and the bank is materialized by the mortgage note. It is a pledge title proving that the bank has a right over your house if you stop paying your monthly installments. Today, this document also exists in the form of a dematerialized registry mortgage note.


If you increase your loan, it is necessary to verify whether the amount registered on your current mortgage notes is sufficient or whether you need to go before a notary to create new ones.


Mortgaging your property means mobilizing the market value of your real estate to secure financing. The creation of this real estate pledge formalizes your commitment to the financing institution and defines the creditor’s rights over the property.


Why mortgage your house?

You should know that you can borrow again against your house if its value has increased or if you have already repaid part of your debt. This is called a mortgage increase (or mortgage top-up). This operation is relevant if you wish to:

  • Finance renovations: Use the increase in your home’s value to install solar panels or a heat pump, which often allows you to benefit from cantonal subsidies.
  • Obtain cash: Finance another real estate purchase (such as a second residence), provide an advance on inheritance for your children, or fund a professional project without touching your savings.
  • Build capital during retirement: Also known as a reverse mortgage, this allows seniors to release equity from their home to compensate for the decrease in income linked to the transition to AVS/AHV and pension benefits (LPP/BVG).


Think of your property as a reserve of money: mortgaging (or remortgaging) it allows you to transform this "dormant" value into available cash for your projects.


What are the conditions for increasing your mortgage?

For the bank to accept mortgaging your house, it verifies that you are able to bear this financial burden:

  • Loan-to-value ratio (80%): The bank will never lend more than 80% of the market value of your house. If your property is worth 1 million, your total debt must not exceed CHF 800,000. For an increase, the bank will generally require a new valuation.
  • Affordability capacity (33%): The bank simulates a crisis scenario where interest rates rise to 5%. It adds the theoretical interest, mandatory amortization, and 1% maintenance costs.
    This total must not exceed 33% of your gross annual income.


To validate your application, you must prove that the value of your property is sufficient and that your income allows you to pay the interest, even in the event of a sharp rise in interest rates.


How to choose the right interest rate model?

Once you decide to mortgage your property, you must choose under which type of rate your interest will be calculated:

  • Fixed rate: You lock the rate for a duration ranging from 2 to 15 years. It is the solution for peace of mind: you protect yourself against inflation and know exactly what you will pay each month.
  • SARON rate (Swiss Average Rate Overnight): This rate is based on the overnight money market. Historically it is the most advantageous, but it requires financial flexibility because your payments can fluctuate every three months.


Everything therefore depends on your risk tolerance. Choose the fixed rate for the security of your budget, or SARON if you have the financial flexibility to absorb a possible increase.


Mortgage on a house: why is it tax-efficient to remain in debt?

Unlike in other countries, many Swiss homeowners voluntarily keep a mortgage debt for tax reasons. The system is designed so that real estate debt acts as a tax shield against two major taxes:

  • Income tax: Each year you deduct the total amount of your mortgage interest from your taxable income. This makes it possible to offset the imputed rental value, the fictitious income that the tax authorities add simply because you occupy your own home.
  • Wealth tax: The amount of your mortgage is deducted from the value of your house. The higher your debt, the lower your net wealth (and therefore your tax).


To optimize these advantages, the preferred strategy is indirect amortization. Instead of repaying the bank, you pay the amount into a third pillar pension account. In this way you benefit from a double deduction: the deduction of your interest (since the debt does not decrease) and the deduction of your pension contributions.


FAQ: Everything you need to know about mortgaging your home

Can you mortgage a house that is already fully paid off?

Yes. If your property is no longer in debt, you can ask a bank to pledge the property again. This allows you to release liquidity to finance another purchase, renovation work, or an advance on inheritance, while respecting the 80% market value limit.


What are the costs of mortgaging your house?

If you need to create a new mortgage note or increase the amount of an existing one, you will have to pay notary fees and registration fees in the land register. These charges vary greatly depending on the canton and are generally higher in French-speaking Switzerland than in German-speaking Switzerland.


Is it possible to mortgage your house during retirement?

Yes, but the affordability conditions are stricter. Since income decreases (AHV/AVS and pension funds), the bank verifies that mortgage charges still do not exceed 33% of your new pension income. The reverse mortgage is a specific solution that allows seniors to release capital from their home without having to repay the debt during their lifetime.


Can the second pillar be used to mortgage your house?

The second pillar (LPP/BVG) can be used as equity during the initial pledge, but it is rarely accepted for a simple mortgage increase intended to obtain consumer liquidity. However, it can be pledged as collateral to improve the interest conditions of your loan.