The mortgage lien can be recorded in two ways: Either the receivable amount (“capital mortgage”) or a certain maximum amount (“maximum mortgage”) are stated in the land register.
In the case of a capital mortgage, the mortgage lien serves as collateral for the lender. It secures the capital claim and any collection costs, as well as any default interest. A special feature of mortgage certificates is that only the interest actually owed is pledged. According to the law, the pledged interest rate agreed upon may not be increased above five percent “to the detriment of subsequent mortgage holders.”
The maximum mortgage is more flexible. It sets the upper limit, including interest and costs. The mortgage lien can be used to secure current, future and potential receivables up to the maximum amount at any time.
Whether capital or maximum mortgage, in many cases an interest rate or maximum interest rate is also entered in the land register. Depending on the canton, regulations governing maximum interest rates apply. The parties decide the effective – usually lower – interest rates in a separate contract that is not recorded in the land register.