What is a mortgage, and how much equity capital do I need to finance my own home? Can I use pension capital, and how is affordability calculated?

What Is a Mortgage?

People who buy a house are often only able to cover part of the cost with their own funds. The remaining capital is a financed by a third party – with a mortgage in the form of a loan. This loan is issued if the property is provided as collateral. There are two requirements for obtaining a mortgage: collateral value and affordability. The collateral value must not exceed 80% of the fair market value. Equity capital has to make up 20%. If the mortgage makes up no more than 33% of your gross income, then the financing is affordable for you.

How Much Equity Capital Do I Need to Put Down to Purchase a House?

The following requirements must be met for real estate financing to go through. At least 20% equity capital needs to be provided by the buyer. This can come from savings accounts, securities, pension capital, or life insurance, for instance.

At least 10% of the required equity capital must consist of readily available assets. This means that this 10% cannot come from a pension fund. The remaining 80% of the capital is financed by us as a mortgage. We also calculate the affordability to ensure that you can manage the costs in the future, as well. The costs (5% "imputed" mortgage interest, repayment, 1% ancillary costs of market value) must never make up more than one-third of your gross income over the long run.

Equity Capital and Affordability of a Mortgage

What qualifies as equity capital for the purchase of a house or apartment? See for yourself.

Using 2nd and 3rd Pillar Pension Capital

Advance withdrawal or pledging from 2nd pillar is regulated by law. Both actions have an impact on the pension benefits. Whereas an advance withdrawal reduces insurance benefits, the benefits remain the same when pledging.

Assets saved in a 3rd pillar pension account or pension securities account or from a life insurance policy can be pledged or used as equity capital (including for owner-occupied residential property). During a consultation, our financing experts develop the ideal solution for you personally.

Increasing and Extending a Mortgage

The structure of a mortgage is very important. By carefully selecting a product and the term, you can save money over the long term. This also applies to extensions, which are available when the respective mortgage product is expiring. 

The mortgage product and the conditions are renegotiated for an extension. A mortgage increase can also be discussed when the time comes for an extension. Particularly if a renovation or modification is planned. The collateral value and the affordability are reviewed for a mortgage increase.

Online Mortgage Extension

Would you like to renew an existing mortgage online? You can do so with just a few clicks on your home computer. With an online extension, you always enjoy convenient online access and personalized interest rates. You can easily begin a mortgage extension in the mortgage overview under "Accounts & Assets."