What is a mortgage?
Everything you always wanted to know about mortgages
When you buy a house or apartment, you can often only cover part of the costs with your own funds. You take out a mortgage for the remaining part. In other words: you obtain a loan from a financing provider that is secured by the property.
How does financing with a mortgage work?
The financing for your dream property is a combination of equity and borrowed capital.
As a rule, you must finance at least 20% of the purchase price with your own funds.
At least half of this 20% must consist of so-called “hard” equity. This is equity that is not obtained from an advance withdrawal from your occupational pension provision (pillar 2). Examples of sources of equity are savings, pillar 3 assets, an advance inheritance or a donation.
The other 10% or less may be withdrawn from your pension fund (pillar 2). You can finance the remaining 80% of the purchase price with borrowed capital – a mortgage.
Which mortgage is right for me?
In order to find the right mortgage, you should first answer the following questions about your risk appetite, your financial leeway and your interest in the financial market:
How do I deal with interest rate fluctuations?
How large is my budget?
Interest in the financial market
How actively do I follow interest rate trends?
On the basis of your answers, you and your key4 advisor will define your mortgage profile and put together the appropriate financing.
When putting together your financing, it may also make sense to combine short-term and long-term mortgages in accordance with your mortgage profile.
When you combine mortgages, the total financing amount is divided into several parts, called tranches. The tranches correspond to different types of mortgage and terms. You can decide for yourself how large the tranches should be. Dividing up a mortgage is useful in order to spread the interest rate risk more effectively.
What is the advantage of dividing my mortgage into tranches?
By the time your mortgage ends, the interest rates could be higher than on the date of signature. If this is the case, you would have to take out the new mortgage at a higher interest rate.
To minimize this risk, you can split your financing into smaller mortgage tranches consisting of different products (fixed-rate mortgage or SARON mortgage) and terms right from the start. You can decide for yourself how large the tranches should be.
With us you can choose the most attractive offer for each tranche. Combine offers from different providers to obtain a suitable total financing package that is individually tailored to your needs.
How can I repay my mortgage?
The regular repayment of a mortgage is called amortization. There are two options for this: direct and indirect amortization.
With direct amortization, you repay a fixed sum regularly – usually quarterly – to reduce the loan amount. As a result, your interest burden gradually decreases over the amortization period.
With indirect amortization, you pay the amortization amount into a 3a retirement solution, which is pledged to the lender as collateral. Consequently, with indirect amortization, the outstanding amount remains constant over the term of the mortgage. The advantage is that you save tax by paying into pillar 3 and you can continue to deduct the debt interest to the same extent. At the latest on retirement, the capital is paid out and the sum is used to repay the mortgage.
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